A CEO and founder addresses some basic questions of business (and some of life) in a new book

Should we remove hierarchy with a hands-on approach in business?

Most organisations are hierarchical. There is a top-down chain of command, and people work within the ambit of their designated titles and positions. I think that’s a pragmatic way of organising a company with a large number of employees, when they are required to execute things in a specific manner. However, there are ways in which the inner circle of chief strategists and CXOs can function better. The top leadership shouldn’t forget that each employee has infinite potential and that harnessing it could be a source of organisational growth.

In the case of Enso, which is a mid-sized organisation in terms of employees, employees often skip the chain of command to offer valuable advice. As a result, I find that the corporate office in many ways is a think tank, replete with creativity and big ideas, even outside the cabins of the big bosses. The secret behind this is that we, as the promoters, give our employees the respect and freedom to be honest and express views openly, irrespective of hierarchy.

This approach has taught me something very meaningful. Every individual’s power of mind is infinite, and if you can harvest that, your company will grow from strength to strength. And while every field is different, drawing out the full potential of every member of an organization is better than having them do the bare minimum. That’s a great underutilisation of human potential and can be demotivating for collective performance in the longer run. At Enco, we often hand out bonuses and employee achievement awards to incentivise performance. Being heard is a sure-shot way of adding to the motivation level of employees.

I don’t think the chain of command needs to be enforced everywhere. This comes with a disclaimer that nobody should misuse their access across the board, of course, and that’s why enterprises must hire only quality individuals with merit. Positions that come with job descriptions give way to structure and enable the allocation of responsibility feasibly. But each of these positions should come with a certain freedom for the hired persons to maximize their potential, not just perform their obligatory duties.

There should be a palpable team spirit channelled towards a common purpose. Even if that purpose is something as simple as increasing sales, for example, the right strategy, as well as the bigger picture, should be made clear to all concerned. That will enable decision-making and align everyone with the leadership’s vision. This is vital. Corporate strategy is very important, and the game of management must be played nicely by senior leaders.

Why should you try to be credible?

It is said that some things cannot be bought with money. Credibility, or the quality of being trustworthy, is one of them. We often see that people don’t give enough importance to the quality of their product or service, which, in turn, reflects poorly on their entire company’s credibility. You cannot cheat a customer, nor can you ever indulge in activities that might lead people to lose trust in you or your venture. People running a business must closely watch their dealings as well, as their conduct reflects on the entire company’s credibility. Guidelines are often given out to other employees, advising them to maintain decorum even in their personal lives. But what some honchos forget is that their own misbehaviour outside work can sometimes come back to bite them at the workplace, so guard your personal behaviour and credibility.

If you promise something to your customers – say an offer, a product, a service or anything at all – you must aim to exceed their expectations. They say that your reputation precedes you. I’ve already stated that word of mouth is the strongest form of marketing. Some brands have been built as a result of years of hard work, and one small mistake can undo their entire reputation. Credible firms are very careful about who they deal with and what they do, and often forego opportunities that might put their credibility at risk. The pharmaceutical industry is therefore much dreaded, for a liability suit can ring the death knell for a company if found irresponsible. Investors are also wary of associating themselves with oil and gas projects to remain affiliated to green, sustainable businesses.

Companies that care about their image, and for which reputation is more sacred than spreadsheets inspire confidence and assurance among their customers towards their products and services. What can be trusted more easily is more likely to gain popularity.

A credible leader heading a firm does not backtrack from their words and instead goes out of their way to fulfil a commitment. The quality of staying true to your words is what ensures your personal credibility, and it goes a long way. Many successful businessmen are known to be greedy and often indulge in dealings where they may let down their business partners. Such people may make a quick buck, but they don’t command the respect, name and prestige that their trustworthy counterparts enjoy. It is a bad trade-off. The road less travelled is bountiful, both in terms of the journey and the destination. Taking relationships seriously, both in business and personal life, is a good start for building a culture of honour among your comrades and kin. One must lead by example and inculcate an honourable outlook towards doing business and living among neighbours. Love thy neighbour, they say.

Corporate diplomacy is not very different from global diplomacy. You have to invest in the goodwill of your company and amass acceptability. Politeness is a necessary behaviour. Not passing negative remarks about the competition, sticking to the spirit of the company, and more importantly, knowing that others are out there to make money too are essential traits of a credible businessman. So don’t aim to swallow or destroy the competition. Run the show with a touch of grace and complacency, making an effort to do push yourself up, rather than pulling others down.

So personal diplomacy and then corporate/global diplomacy, in that order, should be the mantra for a leader who can get work done, stand shoulder to shoulder with countrymen and contribute to healthy nation- and planet-building, no matter your place of birth or residence.

Excerpted with permission from The Business of Life: Answers to 101 Tough Questions, Vaibhav Maloo, Pan MacMillan.