Dec 17, 2009

How not to engage Stakeholders - 101!

In families, when taking a major decision (like buying a house or deciding to move out) people generally talk to parents, spouse, kids and everyone who matters. Business schools call it Stakeholder Analysis and Consensus building. While it is a Organizational Behaviour topic, the point is raised in strategy, marketing, governance and even corporate finance discussions.

The recent decision from BSE to advance time by 10 minutes and the reaction from NSE to advance it by 55 minutes is a classic case in this area. The decision was being thought over for sometime. In fact, it was more on lines of 9 to 5pm. But there were issues of settlement etc.

The supposed positives include more volumes, greater overlap period with some Asian markets and possibility of allowing more investors to invest/trade due to increased time. But these are all guesses as of now.

But the strange part is the very little time given to the brokers to adjust to the new timings - less than 3 weeks! Generally brokers would be a happier lot because of the additional business that extended timings offer them. But they still need their offices to open early, employees to come early, make arrangements for starting the trade early (like turning on lights that may be contracted outside) etc.

And for large cities like Mumbai or Delhi where employees travel for more than an hour the initial inconvenience is also likely to generate some hurt within.

Change, for a logical reason, is fine. But if a gradual change is a valid and viable option, why not exercise it? If for 2 decades, this time was suited for trade/investing, how can these institutions justify a sudden switch with a 2 week notice?

And to top it all, I heard voices saying consensus was taken. What was the sample size to build consensus?

What could have been the way - Possibly few months notice, gradual feelers to "all" stakeholders, some dummy operations in extended hours to allow system testing, etc. Stakeholder consensus goes a long way in building reputation.


P.S.: Made some factual corrections.

2 comments:

Paddy Killimangalam said...

Not sure if the move has any real advantages. It definitely doesnt matter for long-term investors. Only day traders get more time to play.

Siddharth said...

@Paddy - I agree. There is talk about overlap with other markets. But not sure if that is going to make any impact.

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