Wednesday, March 20, 2013


In the area of Credit, decision-taking has its own special place. There are some professions which call for taking decisions and some which don't. For example a teacher may have to take very few decisions. Decisions of doctors and officers in charge of law and order and security could result in fatalities or damage of reputation, but they cannot wriggle out of a situation that demands decision, though Collectors have been dismissed for failing to fire, just as they have been dismissed for ordering firing, and Commandants Court Martialled for inaction. In general, one can avoid taking decisions if there are no structured or precise guidelines for the decision taker and there is a scope for getting the benefit of doubt. For example, an SP can say that he didn't order his people to open fire on rioters as he apprehended greater violence in such case. But this is a one-off scope, and in case of shirkers, a definite pattern is bound to emerge. 

To come to Banking and Finance, while the mistakes of a Doctor are buried or  cremated, in the case of Finance professionals, they result is monetary losses which could be staggering. In case of Public Sector, there is a big brother called CVC sitting with a pairs of binoculars. One naturally compares the figure of possible loss with his/her salary, and that is the beginning of the trouble. Human nature being what it is, the new executive, or the unwilling executive shies away from decision taking until and unless he is trained ad prepared by the organisation and superiors in assessing risk, and indicating what is a permissible risk from the point of view of the 'Objectives'. Some organisations set up very precise goals for monitoring. For instance a colleague joined a Foreign Bank at apex level and the MOU stipulated that at the end of 3 years, the NPA should be 1%, failing which the contract would not be renewed. The implication was that he will be fired also if the NPA remained less that 1%, as that would lead the Bank to conclude that the quest for business growth as per the risk appetite of  the particular Bank had remained unfulfilled at the CEO's hand. However the risk philosophy of your organisation will never be, or can never be, spelt out in algorithmic -fashion and the responsibility for assessing the same has been cast on you and me only. No one has the exact answers, not even the Chairman. But what is the fun in being in high finance and not taking calculated risk?

The writer was also quite risk averse at the onset of his career, and has changed beyond recognition now. You'll be surprised that not a small role in our taking heart was paid by a humble tribe, that of the Barber (the word is considered impolite now, but for want of another word conveying spontaneity, it had to be retained). Just see the guts each and every worker in a saloon has (for 'he', substitute 'she' mutatis mutandis):       

The various operations in the saloon could be a haircut, dyeing or a shave or a massage.The staple is of course the haircut. While the lead time could be an hour, the haircut per se is a fifteen to thirty minute affair, depending primarily upon the hair length, the texture, the curl level, the dense-ness, the desired style, and the final desired length of the hair. As our barber friends have confided, around half of the clients of an established saloon are permanent, and the rest, floating. In the case of permanent clients, the difficulty occurs only on the first occasion, which should be obvious, for if the hair is ruined on the first occasion, the client will never become permanent.

The first-timer or the stray client will mutter a terse ‘short’, ‘medium’ or ‘just trim’. Here comes the first decision then. What’s short? How short is short, and how short is long? The personality of the client also comes into play here. Normally the client will not pick up a quarrel with the barber.Hair will always grow and bounce back. Ghar ki kheti, as they say in Hindi. Thus while the risks are limited, the fear in the barber’s mind is real and he should always be tense, but he has got used to the scene. He could for instance, hurt the client and make a Paul Gauguin out of him. The client could be narcissistic, he could be finicky, or he could be indifferent to his looks, unless he is married. The corollary is that the barber as a tribe is chatty and friendly, so that the client is kept in good humour.

As the hair-cut operation progresses, he anxiously looks at the client. Both the client and the barber have a continuous feed-back in the shape of the mirror, which is a boon, but could easily be a handicap. Monitoring is a heavy exercise in corporate management, and many a disaster could be camouflaged, but this negative benefit is absent here. Goldfish have no hiding place, as the title of an old James Hadley Chase book goes. Again some clients could be disinterested in the mirror’s feed-back, but the barber has to be on his toes, literally.

They say while driving, one carries out 32 operations simultaneously. The barber’s job is no less daunting.

Now, the spotlight is on the client again. He has always had a past and measures the barber against some acquired benchmark. The barber tries to anticipate things. Dedicated barbers seek directions, but mostly they will not, and that is the strength of the community- they plump for independent decision making. Too many directions could cause complications in the process which is after all to last a quarter hour, and the time of those who ‘stand and wait’ is also important.

Now comes the most difficult part. The barber tries to imagine what the cut looked like when the client had descended from the chair last time. He has to decide what scissors to be used when, when to use the narrow end of the comb, whether and how many times the hair should be sprayed with the mist of water, whether to use the hair-mower. He will have to balance the hair mass on both sides of the head, so as to ensure symmetry. The beauty of the skill set of the barber is that the multi-dimensional risks matrix is handled end-to-end , from the beginning of the operation, to its conclusion, without a spill-over or a take-off phase , and seamlessly, and very, very fast.

The final product then has to agree with the self-image that resides in the mind of the client. The rear of the head is innocuous, and then savvy barber will always hold a mirror at the back of the client and coax out a 'goooood...!'. But although the client can tell a good job from a bad one, esp. after he reaches home, he is neither concerned with, nor has an awareness of what the process is like. All that he is concerned is the fruit, and not the methodology of growing or rearing the fruit.

It requires guts to be a barber. For many, the face is the fortune, and to take chances with the fortune of a stranger, who puts his fate (till the next haircut becomes due) squarely in another hand requires real strength of purpose and character. Any senior manager of a bank should definitely appreciate the man. In a bureaucratic set up, had the Bank been a saloon, the employee would have first ‘put up a note”, and waited for its disposal. Certainly a Committee or a ‘Working Group’ would have to be constituted. One would love to find out whether and how these skills brush off upon their day to day life of the barber

To generalise, excellence is not restricted or dictated by profession or caste, but of the dedication to the thing in your hands, however significant or insignificant. Sincerity will rub off on whatever profession you will follow.

Note: On the body of 'Risk Management' Theory and relevance of VaR etc, to us,... another long!

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