I would like to recount some experiences as a Small Business owner struggling to survive and hold on to the business and build it up as much as possible under the prevailing circumstances. One may wonder why should I do it? I could easily get a job, get a high salary and not worry about any of these things.
I have felt that I owed myself to run a business because that opportunity was given to me, provide employment to as many people as I can and I kept running, I should say forever so that I will not fail as business and more importantly to me, I will not fail to put the food on the table for my employees, to find the money for their mortgage, the money for them to pay the tuition for their children. That I should not fail them was a greater force in my mind than making more money out of the business.
This is not the topic I want to write about.
You know it is not easy to find a market in the International scene where almost everyone is competing. There is competition based on technical excellence, competition based on speed of delivery, competition based on the skills in marketing and sales and competition where knowing the right person in the right place means everything. In fact, that is perhaps the most important thing. You should know the right person in the right place because all said and done, all that you may say about securing a business through a tender, through a competitive bidding process and so on, finally the deals are struck between two individuals, one from the buying side and one from the service providers side and they have to like each other. If they do not like each other, there will always be a reason found for that buyer not choosing this service provider.
I have dealt with almost all nationalities in the world and each set of people behave in a different way. But there are a few people whom I would categorize as “More loyal than the King”. In other words when we provide a service and there is a rate fixed for providing that service, it is supposed to imply that the rate will be adequate to keep the service provider in the positive side. The sub-contractor should not exploit it and make a huge profit, he should make enough profit so that he can survive and continue in the business. This is something that a lot of people who are in the business of giving contracts or engaging sub-contractors should understand.
I have often thought about this because I have been on the receiving end since I am a service provider. There are some who want to keep bargaining and bringing down the price to the lowest level and make sure that as a subcontractor you just do not make any money. All the profit must be made by the contract giver and not the contractor. I don’t think an enlightened organization will fail to understand that not only should they survive and flourish but also those who are serving them. There may be one or two that are not enlightened but a regular organization must understand not only should they survive and flourish but those who are serving them should also survive. They may not flourish but they should survive. So why is it that some of the employees in these organizations who are in the position of giving contracts squeeze and squeeze and squeeze till the sub-contractor is almost finished and they get a devilish delight of this exercise of authority and power which they do have. Why do they do it? I think some of it has to do with their culture related and even their country of origin. This also means that if they come from a poor country where you are used to bargaining, if you go to the market, you will never pay the quoted price and you will bargain and bargain till you get the lowest price and then only you will buy it. There in that Country it made sense because you are the direct beneficiary of the bargaining and the benefit goes directly to you and it means something to you. But when you are working for a Global organization, and your company is doing well, squeezing $1 from the sub-contractor is not going to make or break your organization, why do you do it?
One reason is that there is a huge ego satisfaction that you can make someone kowtow and you can bring him down to his knees and then dictate your terms and get the business.
The second reason could be that this person may be from a similar background, but he is in the position of giving a contract to you and you are in a position of seeking a contract and he wants to teach a lesson that he is more powerful. It is all ego related because whatever you save $1 or $2 is not going to your pocket. Your boss may say “Good Job”, you brought the price down by 2% or 5%. But very often the amount is so small he may not even bother. For instance, a ship bunkers 8 times and if you reduce the price of testing by $2, you reduce the price per ship by $16 in a whole year and it will constitute a very minor decimal fraction of the cost of the bunker fuel or the operational cost of the vessel. I often think, here is a sub-contractor who is honest, who is technically superior, who is providing a good service to you from which you benefit. Why don’t you give him a slight leeway so that he is also happy with the rates you are willing to give him and allow him to survive. By bringing him down to a rate where he is struggling with his neck tight and his eyes popping out of his face, you have brought him to that level and there is great happiness and pride in getting him this to this level, what do you benefit? Are you taking that money to your home?
On the other hand, if you have the generosity of heart and the understanding of the business that you should give something that the service provider is satisfied and he happily works for you.
I want to say that there is no need for you to be “More loyal than the King”. If the King is not asking for it, you are not going to get any kudos for it. The only reason you are doing is to satisfy your ego. Please do not do it because there is no magnanimity there and there is no spirit of give and take, a quid pro quo in this. The contractor also has to live, he also has to survive and he also has to run the business and feed the people working for him.
I do wish that this message goes to the people and it helps to broaden their heart and broaden their vision and understand business in a larger context. It is not about success in squeezing somebody. Business is where you build a community of participants who all benefit and who all put in efforts and who all work with you. All the profits need not flow to one party. Some of it, at least to the level of survival could be given to the sub-contractors.
Not to be reproduced without written permission of Dr. Vis or Viswa Group
Kind regards
Dr. Vis
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