Nothing is free; even things that appear free often have to be paid for in the end. “There ain’t no such thing as a free lunch”.  The maxim refers to the idea that it is impossible for a man to get something for nothing. The “free lunch” refers to the once upon a time, common practice followed in the bars and saloons in United States providing a “free lunch” to patrons who would purchase at least one drink. The variety of foods on offer were high in salt such as ham, cheese, salted nuts, salted fish, salted crackers, salted cashews etc. Those who ate them would end up buying a lot of beer. Naturally, foods high in sodium make you thirsty. The saloons/pubs/bars used this idea to fast sell their alcohol. Isn’t this cheating? Would you call it a great selling gimmick? This is a common practice even today by the bars and pubs of providing salted nuts, salted cashews, pakodas and papads as starters.

Rudyard Kipling wrote about free lunch in 1891 when he entered a saloon in San Francisco. There were pictures of men with hats on the back of their heads eating food at the counter. The beer bars those days offered free lunches to patrons who bought drinks. The cost of drinks was less than a rupee a day and they ate as much as they wanted. The free lunch concept spread from big cities to the whole nation. By 1930, big city bars around the United States were offering a free lunch to drink-buying customers. Some bars jacked the price of drinks up a few cents to cover the cost of the lunch but others absorbed the food cost and made their money by selling more drinks (volume). In 1934, the new mayor of New York, Fiorello La Guardia, said, “No more free lunch.” He wanted to put an end to the sleaze. The El Paso Herald published one article in Economics which was titled as “Economics in eight words” with acronym “TANSTAAFL” There Ain’t No Such Thing as a Free Lunch.  The phrase became so catchy and caught attention of many readers and thinkers it continued in many articles those days from 1942 till 1947.

If some individuals or group gets something at no cost, somebody else ends up paying for it. If there appears to be no direct cost to any single individual, there is a social cost. Similarly, if somebody is getting benefit for “free” from a public good or service, remember someone else is paying the cost of producing these benefits. If you’re travelling without ticket on the local train, remember many lakhs of people are paying for the monthly pass and buying tickets. We don’t realize that major problem and reason why free riders often enjoy without paying is because the property rights are not clearly defined and imposed. There are many loopholes in law and order.

When stores offer some discounts – sometimes up to 50% and 60% discounts aimed at drawing customers into stores; in many cases, those bargains are a carefully engineered illusion. The common assumption is that retailers stock up on goods and then mark down the ones that don’t sell, taking a hit to their profits. But that isn’t typically how it plays out. Instead, big retailers work backward with their suppliers to set starting prices that they wish to pay for the unsold goods; after all, the markdowns will yield the profit margins they want. A lot of discounts are already priced into the product. That’s the reason we see much more stable margins.

Same is the case is with travelling and touring packages. We find many discounted packages in rainy season. Travelers feel great to visit some enormous destinations in half the prices. In fact every service offered in the package is calculated backwardly. You end up paying for breakfast, lunch, even the parking, internet and Wi-Fi connections, transportation pick up and drop to the airport, parlor services – you name the service and it’s charged cleverly. Nothing comes free. The hotel room charges get fluctuated depending on the season and business. The slack seasons are already calculated in annual budgets and trickily priced.

The healthcare segment as well does not spear us from hidden charges. We are charged on anything and everything. The health care system is an unusual squander associated with its multi-payer private insurance system. The administrative costs in healthcare mounts due to the insurance system, including not only the marketing and utilization-control costs and the profits reaped by the insurance companies, but also the costs imposed on physicians, hospital maintenance, food and catering and other service providers by the complexity of the insurance system. The Insurance players hike the prices, which the health insurances buyers don’t understand while buying the insurance packages. Hospitals are the most powerful players in a health care system that has little or no price regulation especially in developing countries. Rising costs of drugs, medical equipment and other services, and fees from layers of middlemen, play a significant role in escalating hospital bills.

The adage of TANSTAAFL initially was as “every choice you make has a next, best alternative that you could have chosen but didn’t.” That obvious opportunity is known as opportunity cost; that is, the price you paid for doing whatever it is you did was the opportunity you can no longer enjoy. Whether or not you are successful in life depends almost entirely on how well you manage your own, personal opportunity cost.  What if Sam Walton hadn’t started Wal-Mart stores at 44 years old?  What if Warren Buffett had listened to his father, and his mentor, Benjamin Graham, and not gone to work in the investment industry?  What if J.R.D Tata hadn’t started Tata Airlines in 1937 which later became Air India? The opportunity cost of each of those decisions would have been overwhelming, in retrospect. That is the nature of life.  You are the CEO of your own life, and your time here on Earth; you have to decide how to manage your own opportunity costs.  You have to choose what you want be in life; how much money you want to make; how much you want to invest; whether you want to run your business empire or work for in an organization.  Opportunity cost is all around you.

Let us understand this clearly that the vast majority of goods are scarce. There are a few non-scarce goods, which economists call “free goods.” air, sunlight and water are supposed to be free goods in most situations. Clean air is sometimes a free good. That is if you go to some pollution free zone like hilly area or a village. But to enjoy the clean air you need to spend money in travel and hotel booking. Water is a free good in many situations. It is clearly a free good at the river, the sea or ocean. However, when you are at the ocean, salt-free water is not a free good – that’s the catch. The fact that the vast majority of goods are scarce, not free, leads directly to trade offs. If we want more of something, we have to give up a little or more of something else. If you want more leisure time, you have to give up some income. If you want the latest, SUV in the market, then you would have to give up spending the money on something else or you would have to save less. We cannot get rid of tradeoffs in life.

What about the richest people in the world? Do they face tradeoffs? Yes, they do. We can point to the standard tradeoffs with spending: if Azim Premji spends few crores of rupees on trying to improve schools in the Uttarakhand, then he needs to compromise a bit on improving schools in Rajasthan. Azim Premji Foundation has allotted about Rs.9000 crores to start 1300 schools across India. If the foundation spends more in one state, it has less to spend in another.

But there’s another way that Mr.Premji faces tradeoffs every day. He is simple to the core. He has transferred 8.6% of his stake in his company Wipro, worth about Rs 8,646 crore, to the Azim Premji Foundation. This is the biggest act of individual philanthropy in India.

Like everyone on earth, successful people also have the same 24 hours which they chose to use wisely. My dear friend, time is a scarce resource. We don’t realize this.  Time is probably the scarcest resource we all have. When we start thinking about the value of our time, we realize that some activities that seem cheap are actually expensive. More colloquially, if we want more of something, some other thing must decrease in our life. Trade offs occur every day for many reasons. So friends, nothing comes free in life.

While many developing nations in world are adopting strategies of growth and fast forwarding their cultural and business philosophies they are not even aware that a major demographic shift is about to convert their societies and their businesses drastically.  And, they are not ready for such a colossal change. The statistics are undeniable. In most developed economies in world, the workforce is progressively aging. Do you know the declining birth rates and the aging of the baby boom generation (workforce between the ages of 55 and 64), are growing faster than any other age group? The desertion of this experienced, talented and mature workforce is challenging organizations to fill their critical leadership positions.

Almost 65% of organizations in the developing countries are struggling to fill the top positions, which include positions in research & development, sales, marketing, HR, IT, logistics, law and finance. In fact, one in three organizations world-wide is struggling to fill key positions.

According to Manpower Group, India, MD Sanjay Pandit, “Businesses need to adopt a long-term approach to ensure they have the talent they need to achieve their objectives.”

The skill gaps for the higher positions are large and wide. Because most oganizations have become terribly focused on growth they have ignored the future leadership crisis. Organizations are lacking the ability or let me put it this way: organizations are ignoring investment in training and developing the future – the next generation of executives. According to Booz & Company’s (the publisher of strategy+business) recent report based on in-depth analysis of India’s top 500 companies, by 2017, 15 to 18 percent of leadership positions in some big companies will be vacant. The fact is they might be filled by people who are unfit for those jobs. This implies that companies will be missing almost one of every five leaders they need. In the absence of proper leadership, those companies can go off track and might lose out on several growth opportunities.

The Tata Group is giving its flagship leadership programme, TAS, a makeover. The group has started focusing on ’employee life cycle’ which studies the employee’s progression in the organization from joining date. The group now centers on developing, mentoring and managing the career of every manager listed under the programme. At Hindustan Unilever, the FMCG giant, the managers at all levels are occupied in identifying talent among their subordinates.

At Vodafone, sensing the need to develop talent for senior roles, the firm has extended its cross-functional induction program to 45 days which earlier was shorter. Across India Inc, companies are waking up to the need of developing leadership pipeline; they are building and harnessing in-house talent for critical roles. While organizations like Hindustan Unilever and the Tata Group have long been cited as models of good internal grooming, those like Sapient, Vodafone and HCL been known for their exuberant HR policies for leadership development are tweaking existing strategies to make their internal processes more vigorous. Some dynamic companies are waking up to the forthcoming disaster of leadership crisis. It’s becoming need of the hour for business organizations for building internal talent for significant roles.

Job rotation is a method adopted by many successful organizations in the world, as technique of developing skills of employees in a variety of jobs. When employees perform the same job functions every day without any change, they experience a feeling of fatigue, lethargy, monotony, and carelessness. They get a feeling of burnout, which decrease their productivity, increases absenteeism, and the bored employees start looking out for new jobs. This all leads to organizational dysfunction. However, when employees rotate across different positions regularly, they experience freshness in their employment.

This gives a change to the employees by helping them to learn new skills. It allows the employees to work closely with new departmental heads, peers and subordinates. By job rotation both the organization and employees can find their “fit” in a particular position; a person might be just the appropriate candidate for a position, which is not known because of his wrong posting. Often organizations have found the right candidate for various positions by adopting job ration policy. Organizations have experienced better understanding and cooperation among the employees by rotating individuals between dissimilar or contrasting business units. Increased movement helps to break down hierarchical perplexity and misinterpretations if any; this in turn reduces grapevine and politics besides talent hoarding by some business units. For example, when a sales worker is relocated in purchasing department, he understand implications and problems faced by the purchasing department staff, the guidelines under which they need to work, also how the quality of purchases influence the final product which the sales person is required to sell.

It is difficult to retain the anxious and hasty generation Y workforce in organizations. They want novelty and challenge in their job profiles and they want the best from the jobs immediately compared to their older counterparts. The new generation is in search of an “ideal” profile, fatter pay packets and quick promotions. They don’t mind changing jobs often. Many organizations are therefore experiencing challenges in employee retention.

Some leading organizations like IBM, P&G and HUL use job rotation policy moderately for retaining a mix pool of experienced along with freshly recruited talent pool. Some seasoned employees who are well versed with the company’s policies and culture befall useful to replace personnel who may leave or move up in the organization. The existing employee’s strengths and weaknesses are known and therefore, staffing becomes easier.

For a good number of years, organizations across sectors have neglected the scouting process of leadership either due to a poor practice of succession planning or insecurity among the senior leadership. According to a KPMG report, nearly a fourth of organizations have filled less than 25% of critical roles with candidates who are not fully prepared for the role. Majority of companies are most worried about having an insufficient pipeline of young leaders and a lack depth of internal candidates for critical roles. And, some companies are not even sure about the efficacy of their leadership pipeline-building mechanisms. Organizations are having a tough time to the constantly led talent fight. Post the global financial crisis, companies have been focusing on their survival rather than talent management. This critical matter might bounce back any moment.

But this is where company like HUL stands apart. Managers in the junior and mid-stages of their careers have gone on to assume leadership positions across sales, media, IT, finance and infrastructure. Under its ‘post graduate scheme’, young professionals are trained over 15 months in different functions like customer development, finance, marketing and supply chain. HUL believes in the job rotation in its global MBA recruitment channel. The job rotation gives a feel about the candidates; each exposure tests the capability of the candidates in each functional area.

In its cross-function induction, Vodafone has included elements like market visits, peer investigation, cultural assimilation and select classroom sessions. At HCL, one of the talent harnessing programs is designed around Dr Michael Watkin’s ‘First 90 days’ principle. During the five-month programme, called ‘HCL Certified Leader’, leaders learn to diagnose situations and apply skills developed through real-time experiences. Their ‘Top Gun’ programme enables high performers to work on real business situations with the senior leadership team. Through such innovative programs HCL has over 1,000 positions with a named list of potential successors across all levels of responsibility. Now, that’s really noticeable move!

Smaller companies are also working on improving leadership processes. Over the past few years, there has been a big shift in how the company looks at talent reviews and succession planning. To conclude, organizations must understand the reality; that is – there are no “ideal” candidates and there is a highly limited supply overall. They can adopt “boomerang” hiring. Former employees who left the organization can be invited back. They will bring fresh viewpoints back into the business which might give a push to the expansion. They may have left as mid-level managers but they can return at senior-level.

It’s better to set the basic requirements for senior positions, what minimum standards are and what “nice to have elements” the company is looking for. I think organizations can compromise a bit. They need to determine how important qualifications are. They must resist the haste of defining ‘qualified candidate’ made without careful inputs and without taking the business environment into account. Most importantly, if organizations refuse to adapt to reality the challenge of shortage of talent will blow out of proportion.

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