CEO Under Scan: Mr. Verghese K Jacob, Byrraju Foundation

Interviewed By: Ms. Ritika Jaggi, Correspondent The CEO Insights


After working for 25 years in the corporate world, you joined a NPO. How do you see this change?

Mr. Verghese: In terms of management day to day activities, there is hardly any difference. Every manager in all sectors focuses at optimization of resources for maximization of results.But when it comes to the primary target audience and the objectives of the organizations, social sector organisations and corporates will drastically differ. As far as a typical corporate is concerned, the objectives are to maximize shareholder value, satisfy customers, employee satisfaction etc. Whereas in a Not for Profit Organisation (NPO), the question of maximizing shareholder wealth does not arise , since nobody is entitled to take a dividend home in a NPO. And here it is not about pursuing bonuses or corporate salaries.. Instead, here you are measured for how many lives of under privileged can you impact with least resources. Hence, you operate from a completely different plane of the Maslow’s hierarchy.

In corporations, people are trapped by monetary , security and ego drivers like maximizing their personal wealth, career graph, outperforming peers and quickly climbing the corporate ladder, fancy designations, power over others etc, which are the first three ladders of Maslow whereas here in a NPO you operate much more from the highest plane of the Maslow’s hierarchy of ‘Self Actualization’, where you sublimate your needs for serving others.. Of course, the corporate ladder climb offers the option to many corporate honchos to experience a very heady, exhilarating career growth. But at the end of this uni – dimensional pursuit, the realisation dawns to many like myself whether is life all about making money, pining for personal fame etc.

Was this corporate ladder ,where I spent all my life climbing at a furious pace , leaning against the wrong wall itself ?

In a NPO, instead of meeting monetary goals and ego needs, we look upon this as a rare and privileged opportunity to serve the society. There are about 750 million people in our country below the poverty line living in stark and abject poverty with monthly family incomes of less than Rs 1200 per month.. It is a matter of great concern and shame that India has the dubious distinction of having the maximum number of poor people in the world. Here we strive to make a difference to those poor multitudes , by using our expertise of management, creative solutions, technology, alliance building capability, new public private partnership models etc. So the entire objectives and motivation drivers of a NPO as compared to a corporate are as contrasting as chalk and cheese.

A NPO, does not care about share holder wealth maximization, but here it is all about “multiple stakeholder delight” and we have many stake holders here – namely the beneficiaries, donors, employees, volunteers, alliance partners etc. The primary stake holder is the underprivileged people of the society, and we need to delight them through our multiple services and make a substantial difference in their quality of life, help them bridge not only the economic divide but also the opportunity divide, the social divide , knowledge divides etc and create a level playing field for them so that they could all equal beneficiaries of the globalization opportunities. Donors , who fund our programs, need to be assured that their money is optimally spent all for the cause they have donated to Our strategy for employee satisfaction is very different than that for the corporate. In a corporate, the main tools of motivating are remuneration, designation, performance bonus, , fancy perks etc. Whereas here, we cater to the type of people who operate from the highest level of the Maslow’s hierarchy whose drivers are not the money that they get, or their designation or authority etc, rather their driver is the opportunity and responsibility to serve the society, constantly create more and more opportunities for the poor etc. The more people they serve the more satisfied they feel inside. They derive pleasure by creating a bond , ever lasting empathy and becoming one with the crying needs of the underprivileged society. The primary leadership trait required here is to lead from the front and sacrifice the most , sublimating all your personal needs in pursuit of higher goals like poverty eradication, social equity etc, while emulating best practices and innovating continuously.

Fundamentally, it is all about managing things well. If you are given x amount of people and y amount of resources and there is a program objective, how do you optimize all this to run the most efficient organisation? In both types of organizations, the efficiency comes out of the management processes that you put in place, various review mechanisms and clarity of goals, but the effectiveness in NPOs comes out of how many people are you able to serve, where as in a corporation, the effectiveness comes out purely of maximizing share holder wealth. As long as the company is making money everyone is happy, the minute something goes wrong, it will be employees who will first get fired, then the customers leave , the company may wind up or close down the operations and everyone gets affected. Whereas here the cause of the social sector isa never ending journey as long as there is poverty or social inequity in the world .

So I would say the management skills required are very much the same but the attitude and the motivation drivers with which you utilize the same management skills are completely different. You are aiming at two diverse ends of the Maslow’s hierarchy.

In the corporate sector, you give your skills, you get your money in return and in today’s dog eat dog corporate world, ,there is no ever lasting bond or sense of permanent belonging to any one corporate or vice versa. If an organization is in trouble, many good performers will jump the ship first and they have many convincing reasons to rationalize this immediate flight.If an organization fires you , you don’t hold that against the organization any more. Even if you quit the the organization abruptly, they won’t hold it against you anymore.. With an apparent heartless organization what can you do anyway? It’s a faceless and heartless entity and it is futile to hold personal grudges. So my point is that as an employee you can not pledge your heart for ever to any corporate. If you want a larger meaning in life and long term satisfaction, have the courage and the freedom to pursue the voice of your inner soul and chase your dreams, even though you will be swimming against the tide all the time. Have the courage to go into streets or where ever you can contribute your time, competence and money and do something substantial for the under privileged .

What are the major challenges faced by you in running a NGO and how do you face them?

Mr. Verghese: The challenges are do you understand your multiple stakeholders well enough and their expectations and do you have the ability to help them exceed those contradicting expectations without sacrificing your core values. Second is do you want to make the beneficiaries dependent on you forever, giving them charity for life. You need to help them become self reliant. Third is managing diverse employee expectations, because even though people may say we want to serve the social sector , still some of them at some point of time will still once again feel motivated by money or they want status or peer recognition etc. So theoretically it is good to say that people should operate purely from the self actualization ladder of Maslow’s hierarchy but many a times they will slip into different planes , so you need to understand that and try to manage their expectations within the boundary conditions. Many of them, when they come for the interview , will talk the right language but when they really put to test do not walk that talk The outstanding ones are the ones who really stay the course and do not mind sacrificing a lot in earnest pursuit of the cause . But some wilt somewhere along the way either temporality or permanently. The greatest challenge is to keep everyone’s motivation levels very high throughout by connecting constantly to a far higher sense of purpose.

We attract people from very diverse sectors, people who come from corporate like me need to have a very high level of commitment to walk away from corporate, make big financial sacrifices without once regretting the choice you willingly made, and enter the social sector. There are many who have come from the government are used to beauracracy and its status needs. Many have come from other social sectors, their heart is in the right place , even though some may lack management expertise. Some are from the from academics background, brilliant professors, domain experts etc, and they are very strong conceptually and excel at research and discovery of new knowledge .

When you get diverse people with very heterogeneous corporate experiences coming into the same melting pot, how do you create a shared vision for all of them ,where they can completely forget their past organizational culture and be in a position to look in one direction and serve the society and help each other while doing that. For that they have to be at the same level, and many a time people have to unlearn a lot of things before coming in. So like a north star or a beacon, you need a very powerful common empowering objective. and you need to create a hierarchy less organization. How do really capitalize on the employee strengths and try to minimize whatever hangovers or vestiges they bring from other elements of their past life ? This is a new career, new beginning, a new life, and a God given opportunity to really live for others, is everyone willing to do so? These are really pressing people challenges.

And my personal challenge has been, coming from the corporate field, am I able to completely walk away from the trappings of corporate power, ego needs, monetary gains and able to make sacrifices in all those needs, to operate at the highest level and walk the talk all the time and inspire others purely by personal example.

How do you define the workings of Byrraju Foundation?

Mr. Verghese: We are a very unique organization in many ways because we are the first structured NPO in India, dedicated to holistic and sustainable rural transformation, which has always believed that we want to use the best management practices, technology, people resources, time and competence in an optimal way aimed at meeting diverse social needs. People who volunteer here may not donate any money, but what they are donating is their invaluable management expertise, commitment and passion for serving the society, so we need to channelize that contribution most effectively through programs or improving our solutions , enhancing our knowledge repository etc.

What are the different finance options you have and how do you finally allocate them?

Mr. Verghese: Cost optimization is very important. Suppose we manage a health program and are given x amount of resources by a donor or trustee. Part of the financing may come from us and part may come from the donor so using these combined resources, we try to make these services cheaper and better all the time. For example, we treat diabetes and the entire cost of treatment cost of diabetes is less than 50 rupees per patient per month .That it is a remarkable breakthrough, since this is affordable even to most at the bottom of the pyramid.Cost of treaing hypertension is less than Rs 45 per month including doctor and nurse time, cost of medicines etc’ Or take the example of our drinking water project. The cost of producing pure drinking water at the village level is 10 paisa per litre which is 1/100th of the actual market price of bottled water in Indian urban cities. To create these solutions we adopt, improve and innovate around the best practices in technology, management etc through structured benchmarking exercises, new knowledge and solution creation topped up by suitable alliances and partnerships. Another criterion is that after setting up the project, if you hand it over to the community, over three to five years, are they able to run it equally efficiently? This is the acid test of sustainability and scalability.

So many a time, when we decide on resource allocation, we debate in that x amount of money how much should we invest for solution design and how much should be incurred for running the program, what should be the time frame for tapering off the subsidy etc. So it is very similar to managing other corporate programs except here we don’t measure the “profit” you make at the end of the program. Instead, how long does it take to become self sustaining, how many lives do you impact, how is the surplus created used for other village development programs etc.become the key metrics. The village in its microcosm is a very heterogeneous village around 5000 people population, there will be 10% of the population who are absolutely poor who can not even afford 10 paise a litre, so for them how long do we give this free, but try and make them self dependant over a period of time by enhancing their skills and leading them to jobs, increasing their incomes etc. So right at the beginning, this is not a completely user fee driven model. There will be lot of charity to start with, but we create a road map for weaning the community away charity dependence over a period of the next three to five years.

What kind of background and domain expertise you look for in your employees?

Mr. Verghese: This sector has undergone some dramatic transformation. We have been part of a path breaking venture. I am an engineer and have done MBA. When I graduated from my MBA way back in 1979 from XLRI, Jamshedpur, , those days you had very limited options to serve the social sector If you still really wanted to do social work, you had to per se walk away from the corporate life, maybe wear a kurta and go and settle down in a remote village among adivasis immerse yourself in tribal work etc It was indeed an iconoclastic option of one man doing this and out of sheer commitment to make a difference and for 25 years he had to work alone to really make something out of his life’s mission.

The good news is that today’s new generation has multiple options because there are many professionally run social sector organizations and you can work for a social cause and still practice the state of the art management skills.. We were one of the first in India to form such an organization, so we said it doesn’t matter where you come from, but after coming here we will use all your earlier expertise and direct your competence and passion to a common goal for the social good. Of course, there are still some sacrifices involved, but they are much less as compared to olden times. 20- 30 % of our people have come from social sector with grass roots experience . About 30 -40 % are domain experts like doctors, teachers etc . Still only a few in the top management are from the corporate sector. We also have a lot of freshers joining from social work streams, etc.. Today we are in a position to give many an opportunity for a career in the social sector, which gives them hands on management experience, while fulfilling their life’s mission. .

So you hire fresh recruits as well as people with some work experience?

Mr. Verghese: As long as your mind is clear that you want to serve the society it is more than enough. You could be singer, you could be an artist, a management expert, a doctor, a chess player , even a misfit in the traditional society . Any expertise can be channelized , you could train the people in your own chosen field, you could expand and disseminate the knowledge in your own chosen area and everyone on this planet can contribute , provided you are imaginative enough to do so and genuinely want to give back to the society.. When I invite volunteers to work here, I don’t bother much about where they come from as long as their heart is in the right place, that’s the only thing I ask. Are you committed to this cause? Are you willing to walk away from the money you would have got elsewhere? Are you willing to go and roung it out in the villages? We value that because then we know that in their heart of hearts, they are fully oriented towards making a big contribution to the social sector. You may work for one month, 2 months, or even a few days, the duration of engagement does not really matter, finally it is their contribution that really counts.

How an MBA from institutes like XLRI helps while working for this organization?

Mr. Verghese: Many a time it is a question of what opportunities do a fresh MBA get in the first place.. When the corporate world booms, 99% of the people would take the traditional corporate career route. There are ,of course, the rationalizations they make such as they have to repay their loans or their parents expect them to earn, family obligations, let me enjoy the good things in life, let me maximize my earning potential in my peak years,let me make sure my financial security is firmly tied up, how can I give away wealth unless I create it first etc. And I don’t force anyone of this ilk to join the social sector on a full time basis , unless all his material needs are met and he becomes deeply committed to the cause of the poor.. But at some point of time in our lives, all of us are bound to get a calling from within to serve society in our own way. For some it may be at 10 years, , for some it may be at 50 years, but I am sure even for the most hard hearted this knock on the heart’s door will certainly be heard sometime in their life.

Even though I had a deep sense of commitment to the society even when I was young, thanks to the values of my upbringing, I had no clue as to how to go about doing this life’s mission as a full time vocation. When I joined the corporate world in 1979, I vowed that when I reach 55, I will retire early, and do something full time for the society. May be I will give something back to where I came from, or serve a niche cause dear to my heart etc, the picture was yet to fully take shape. But I was very fortunate to run into the Byrraju Foundation opportunity to do this .much earlier than what I had envisaged. Many may not even think of society when they are in the absolute hustle and bustle of corporate life, but you will always get a call sometime in life saying that is this all what life is all about, what is the grand purpose in my life, how have I contributed to making this world a better place or how do I handle this guilty burden of the sheer emptiness that mere pursuit of wealth will leave behind at the end of our lives. Warren Buffet amassed over 50 billion USD in his lifetime and one fine day, all of a sudden, he donated it away 33 billion to charity. Bill Gates is worth 55 billion USD and he has stated that his entire fortune will be given away to charities. A reporter asked him you have two daughters, how much are you going to give them , Gates said 10 million each and everything else goes to charity. The reporter tried to plead on the daughters’ behalf, he said can’t you at least give them a billion dollars each. Bill Gates replied that if they can’t make it big with all the head start given to them and with 10 million ,,then they will never make it big. Instead the money will serve a charitable cause better!!!

At the end of our money making trail, all of us realize that you have more or less maximized your wealth or earning potential but what are you going to do with that wealth in your life time and beyond you can not spend it all on yourself and probably you are doing a disservice to your children by giving all this to them without their working for it, because then they will never take responsibility for their own life. Warren Buffet said it is easier to make big fortunes, than giving it away for worthwhile causes.

So at some point of time, you have to say ok this is what I want to do with my life, first few years I will do my job and fulfill all my financial obligations and in the next stage I will cut down on that and I will try to live more for others than for myself and for many of us probably there is an opportunity now as you reach 40 or 45. So I would say at least 20% of you will make sacrifices on the monetary front because you will probably get 100% more in mental satisfaction in this trade off . You increase your peace of mind substantially, you feel much happier,, you feel you have contributed something far more fulfilling and the legacy that you have left behind has impacted many more people than just your family. This is always something in life that no amount of money can buy for you. I always say that this calling will come for everyone ,for some it will come early in life, for some others it will come in small volumes for doing part time work etc, and for a few it is a compelling urge from the bottom of the heart, , which even the best of rational minds will not able to resist.. When you have enough money or you spend your life doing that hollow pursuit alone, there are some extreme reactions when a few in this category will walk away from material pursuits and then do social sector sanyas for the rest of their lives, But living the right balance throughout is important.

How do you see the current recession affecting the industry?

Mr. Verghese: For the corporate sector, I think there it is going to be dramatic consequence, because there are many people out there who derive satisfaction only from salaries and job security etc , they are the ones who are going to be most impacted. As far as social sector organizations are concerned, if they are dependent on funding from corporate sector then the recession is also going to hit them from the program funding point of view.. But for other NPOs, who are not overly dependent on corporate funding and are more channelized towards getting people’s free time voluntary to serve society, probably this is a great opportunity for them. Because there will be lot of people from corporate sector who want to take a sabbatical for say 2 years and still give a new meaning to their lives and this is a great opportunity that can be tapped by the social sector. I always look at the brighter side of things.

What is the role of your institutions and microfinance institutions in uplifting the poor?

Mr. Verghese: Microfinance is very much part of the social sector needs, it’s also meeting a crucial need of the underprivileged of providing readier access to much needed financing needs., So to a large extent microfinance does meet this crying requirement, but the way microfinance organizations have evolved their business models., many a time the social objectives are completely jettisoned. Because if they are charging 24% to 36% interest from a poor man and go by a fancy name of microfinance institutions, how are they any different than the wicked village moneylender of the past ? Microfinance should not become just a a buzz word and these days to be in microfinance is considered honorable and fashionable. On the other hand, if they give loans at lower than the bank rate, then I fully appreciate microfinance .But, if they charge such high interest rates, then obviously microfinance is just a money making racket and merely trying to buy respectability by calling themselves a “microfinance organization serving the needs of the poor”

Who is your role model and how do you think good leaders can tackle situations differently?

Mr. Verghese: My role model always has been Gandhi, for the simple reason that he understood the needs of the village masses and the harijans and was way ahead of his times in articulating his vision of self reliant Indian villages. His simplicity driven life based on non violence and aspiring for a social equity based new order was his greatest message. But unfortunately, after the freedom struggle and Gandhi’s assassination, none of the political leaders who still use pictures of Gandhi and wear khadi to get votes, have practiced the ideals of Gandhi, which I feel is of great relevance even today. Even after 60 years of independence we have 750 million people facing abject poverty and half of them are living below Rs 1500 of family income per month. While these masses still struggle to eke out a hand to mouth existence, we brag about how Indian corporates are shining, how India has one of the most impressive economic growth etc. What good is all this , if we are still unable to bring about equitable growth ? Is it not ironic that the land of Gandhi still harbours the worst forms of injustice, corruption and social inequity. Gandhiji said that poverty is the harshest form of violence in the world. How can our conscience still permit us to live with this stark poverty ? I think there is something seriously wrong with us, if we are not sensitive to the needs of the poor and unless we are able to do something substantial for them.

Any suggestions for MBA graduates?

Mr. Verghese: I urge every aspiring management graduate , that regardless of your pursuit of your corporate ladder dream, the first thing you should have before becoming a corporate leader is social responsibility. A true leader of tomorrow will need to know that there is a great responsibility to the underprivileged sector ,irrespective of whether they are your customers, or whether they are in your immediate proximity , or whether they pose an imminet threat to your business etc..

Secondly, what is the difference and contribution you can make to them? It is not your cheque book charity alone that they are looking for, but your management expertise and your personal commitment and hence your organisational commitment is what is much more important. This value, if we inculcate in every person in our sphere of influence, it will be a great beginning. I think India will be a great nation if we have many more socially responsible corporate leaders in the future.

Many of the things we are seeing around us today will be much better, because today we still see a lot of corruption, lack of accountability, lack of governance etc. It is not about lack of financial resources either. Rural development has a budget allocation of 2 crores per village under multiple schemes, but not even 25% of it does ever really reaches the poor man in the village. So my point is there is a need for bringing in more accountability, efficiency, transparency. And last but not the least a great amount of honesty. And every one defines their own ethical route which is also wrong because they try to justify their wrongdoings that way.


Profile of Ms. Ritika Jaggi

Ritika is doing MBA in HR from IBS Hyderabad, India. She has done her Internship with Tata Consultancy Services in Hyderabad on the project “Human resource dynamism in the Global Economic Perspective”. She likes reading, dramatics and participating in Debate competitions. She also likes writing poetry.

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