By putting people ahead of structure, Forbes Marshall, rides high on a culture of openness and flexibility | by Indira Rao | Imagine an organisation where you can change your job portfolio if you are not satisfied with your current role. Imagine a workplace where the directors not only know the senior authorities by name but also every person working on the shopfloor along with their employment history, progress and family. Sounds something out of an international case study, doesn’t it?
Well, this is exactly how Forbes Marshall, India’s leading steam engineering and control instrumentation firm, functions. And rightly so it has been ranked the fifth best workplace for the year 2013-14 based on a survey conducted by the Great Place to Work Institute, across India. The company has won the accolade for the fifth time and is the only company in Pune to have consistently been ranked high in the survey year-on-year.
Employee engagement has been one of the core principles of the organisation. Naushad Forbes, director, Forbes Marshall, and vice-president, Confederation of Indian Industry, giving credit to his father, Darius Forbes, one of the founders of the company, says, “Around the mid-60s, my father made the company a ‘nopeon’ organisation. At that time peons were very common and the ‘no peon’ policy caused a lot of consternation in the company.
All of our peons were put into other areas of work. In fact, one of them retired after 40 years as one of our most skilled packers.” He further said that the principle was to not have people whose sole job in the company was to take care of someone else. “Each person should be valued for the skills and the contribution that they themselves make and each contribution is just as much deserving of worth, respect as any other. Each employee has different roles to play in the organisation and all should be respected equally. This very basic principle comes naturally to us today but at that time it was quite unusual.”
Farhad Forbes, director, Forbes Marshall and Naushad’s older brother, further cites an example where during the earlier days there were people on the machine shop called ‘helpers’. “Helpers were equivalent to a peon and they would load, unload the job and clean the machine. The machine operators wouldn’t do the same as they would hurt their back or harm themselves. We changed this philosophy and put safety mechanisms in place and thus the operator, even if he is a graduate, became responsible for the entire machine; be it lifting the equipment, handling or cleaning it. There were no more helpers.”
This philosophy is what the two brothers have inherited and have stuck to all these years. Says Farhad, “In the 90’s when I was at business school, management of HR was just beginning to formalise. While I learnt strategies and marketing, sources seen as competitive advantage, I also learnt one of the greatest lessons of life. I had a professor at Stanford Business School and he was one of the people who said that your greatest source of competitive advantage actually can come through people. And that is something very difficult to duplicate because marketing strategy or manufacturing practises can be copied but one cannot copy culture as it comes from people. So, if you can have a culture that is built on people that is a sustainable competitive advantage, which is what, I think, we have built up.”
Jehangir Ardeshir, group CEO and director, supervisory board, Forbes Marshall, presents his opinion as an outsider. “I am fairly new to the company but have been on their board since the last seven years. I think there are various assets that reflect engagement with employees in this organisation. One is that these two gentlemen know almost everybody by name. That is quite wow and I am struggling with that one because I am getting to meet lots of people. They not only know by name but are also familiar with what they do and in many cases know their families and what they are up to, which I think is remarkable. Another aspect is that the organisation truly puts people ahead of structure.”
What this means is that if there is a role change for an employee and if that person though happy with his new profile is not very enthusiastic of his new reporting head then work will be re-designed for him. “It will be designed in a way where the employee gets to work in his new role but will report to somebody else,” asserts Jehangir. “Such an organisation change requires a different kind of focus. If it makes an employee happy then he is completely productive and if he is comfortable with it then so is everybody else. It is very counter-intuitive but it actually works.”
“It is messier, ambiguous but we are very good at tolerating that ambiguity,” quips Naushad. Jehangir confessed that initially he used to wonder whether such an approach is the right thing for a company but then he realised that is the culture that is imbibed here which leads to attachment. “This is a pretty flat organisation in terms of how it behaves. So you could have anybody from any level walking to any room on first names terms with anybody. And it would be an eyeball–to-eyeball conversation. It will be a conversation between two human beings as equals and not a hierarchical conversation.”
“The focus is on communication and not who is saying it,” stresses Farhad. This approach creates further engagement. Also, when new people join the company there is an organised HR process of induction and everybody on the leadership team has to meet all the newcomers. “One of the things I always ask during these induction meetings is, ‘what have you found in this organization that is different and has surprised you’? And without exception they all say freedom,” declares Naushad.
What is also interesting is that there are no wooden doors in their office but only glass. “This by itself makes the place more transparent and an open place to work in,” avers Farhad. This balance of right spirit and process is what makes Forbes Marshall different from its competitors and also clearly indicates why the company was profitable in its core business when the rest of the manufacturing industry was shrinking.
A company cannot stand tall just by its exceptional HR practices. What also matters is their products, technology and their marketing strategy. Forbes has a pretty wide product range and they make everything from flow metres to boilers. There are products machined from castings, some that are purely electronic and some that are a combination of the two. Thus, the manufacturing process is pretty diverse.
Naushad agrees, “Our shopfloor looks like a mixture of many verticals because of the different kind of processes we do. For example, it might look like a regular mechanical engineering workshop because of the CNC machines and assembly. It also resembles an instrument factory because of the electronics manufacturing and assembly. There are fabrication stations for boilers and other equipment. I think if you look at this combination, given all that we do it makes us quite unique.”
The company has recently set up a new Greenfield factory at Chakan and they have enhanced their processes further. Farhad explains, “Everything in terms of layouts, process, equipment, etc. has been designed in terms of the culture that we want to bring in. For example, no work is being done sitting on the floor. Work stations are designed such that everybody is able to stand and work on a job. We have made it a practice that there shouldn’t be any materials lying on the floor and everything should be in pallets or at easily accessible heights”.
It was the boiler manufacturing unit that was the first to shift from their Kasarwadi plant to Chakan and it is their ambition to set up the world’s best boiler factory at Chakan. “We do not know if we have set up the world’s best boiler factory but it’s a lot better than what we had in terms of equipment and throughput,” asserts Naushad. The facility is spread over 60 acres and has the capacity to do twice as much as before. “We need the business to pick up so that we can start working according to our capacity and pay for the new factory,” confesses Naushad.
Safety practices have also been enhanced here. For example, welders go into the boilers wearing a cooling jacket. There is also a ventilation panel and therefore his workspace is also better and much safer. Handling facilities too have been designed for specific purposes and the employees are coaxed to follow the same. Helmets too have been made compulsory.
Large emphasis is also put on training. Everyone is expected to get at least a week of training a year in all functions at all levels. These trainings are technical as well as non-technical. Non-technical includes training in leadership development, communication strategies, presentation skills, etc. “We also have training centres in other parts of the country. Delhi has a full-fledged training centre whereas places like Bengaluru, Hyderabad and Baroda have smaller centres,” mentions Naushad.
Then there are training programs that are dedicated solely to women as the company has a fairly large number of women in the workforce. “As of now women form 18% in our organisation and we are actually a little concerned about it because we want this number to grow,” declares Farhad.
With such productive people in the organisation, it is quite apparent that the products that come out of their kitty have to be quite exceptional. For example, they have a very innovative solar co-generation product which does both produces electricity and also gives hot water as a by-product. This involves very accurate tracking of the sun. “We think it is truly a unique product. We have to make it commercially viable for the customers because it has a payback of around three – four years,” says Naushad quite unabashedly. “And in the current environment people are very reluctant to invest in something with a three-four year payback. They want something with a one-year payback.”
There is another product that gives real-time information on the phone. Explaining the product, Farhad says, “This is an app that can, for example, tell you how your process is operating. It gives real time alerts of what is going on and where in the plant. We already have devices that do the measurement and now we have something that produces the interfacing with these devices. Currently, the app is out for different functions and there are constant developments happening every month.”
For such innovations, R&D is very important and this forms an extremely critical function at Forbes. 8% of their sales go into R&D, which for an Indian company is pretty high. Naushad has a very interesting take on technology and opines that the test of good technology is economic. Elaborating, he adds, “We apply this principle in our own firms through our innovation metrics. We use three innovation metrics – one is technological and the other two are economic. The metric that we use the most is the proportion of turnover that comes from products launched in the last three years. So that is a pure economic metric. This really reflects the overall output of R&D in terms of new products and how attractive those new products are to the market and to customers, how well they perform such that they start leading to growing sales quickly, etc.”
The second metric that the company uses is the percentage of value added or the gross margin percentage of each product. “The intention is for the R&D to take us as a company up the technology chain in terms of value addition that we have in our individual products. So if our average as a group is 50%, then the output of R&D can move us closer to 60% or 70% because if you look internationally in our own fields, generally companies in the West and Japan, have gross margin percentages that are higher than that in India.”
Internationally, the cost structures are higher but their higher gross margin percentage reflects, generally, a greater technical content and more of a technology premium that they are able to get. Forbes tries to measure this in their firm as well. The third metric is innovation, which is quite straight forward and judges on the basis of the kind of proprietary technology being developed by them.
Seconding Farhad adds, “This metric shows the proprietary technology that we have developed on year-on-year basis. Proprietary technology will show up in things that are IPR protected, i.e. packing, trademarks, patents, designs, etc. not only that but it will also show up in some things which are just know-how that is kept within the firm. This can be our competence, capability or anything basically that we have built within our firm and not necessarily through a patent.”
The firm files around four to five patents a year. “In our field, patenting is not that common. Most technology is protected through know-how, through proprietary knowledge which is kept within the firm as opposed to a patent,” affirms Naushad. With a fantastic R&D team, competitive products and happy and productive employees it looks like Forbes Marshall has hit the nail on the head. What then, we asked, keeps them up at night? Says Farhad, “I think, in India we still struggle with the issue of making manufacturing an attractive area to draw the best minds. One of our main challenges really is the ability to continue to attract good people and the capability to provide these people with the opportunity to grow and meet their own aspirations.”