Creating value is more important than playing a valuation game

In this interview, Mr K. Pandia Rajan, Chairman, Ma Foi Randstad, shares with passion the lessons learnt in his entrepreneurial journey and advises entrepreneurs that “Creating value is more important than playing a valuation game”.

Mr Pandia Rajan founded and built Ma Foi Management Consultants Ltd into the first public limited HR service provider in India with about 1,600 professionals in 55 offices. He has played a crucial role in the evolution of HRD as an industry in India by offering a basket of innovative HR products through Ma Foi. He has generated career opportunities for above 3.3 lakh professionals in 36 countries over the last 18 years - pioneered HR Business Process Outsourcing in India. He is the Founder-Trustee of Sornammal Educational Trust (SET) that runs a school in Chennai for the underprivileged and has adopted over 4,000 children in Chennai, Virudhunagar and Madurai.

He has promoted micro-finance and micro-livelihoods through self-help groups for over 58,000 women. He is the author of “You are Appointed” and “ Ayirathil Oruvan ”, career guidance books in Tamil for youth.

He has a B.E (Hons) from PSG College of Technology, Coimbatore, and an MBA from Xavier Labour Relations Institute (XLRI), Jamshedpur.

How has your journey been as an entrepreneur?

This is a 19-year-old journey with Ma Foi and it has been exciting building the company. I look at the growth in four phases. The first phase was purely entrepreneurial, the second was when we had a number of investors who had invested small amounts of money. Ma Foi was focused on all the areas of executive search, permanent placement, outsourcing, staffing, HR consulting, career training, HR automation and HR BPO. The third phase of the company was when Vedior bought out the early stage investors. The latest phase is where Randstad acquired Vedior in late 2007. We currently operate as Ma Foi Randstad.

When you look back will you rebuild the company in the same manner as you have done?

Before widening the scope of the offering, I would have built scale and depth in each of the eight service offerings of Ma Foi. I would also not have gone international before building the depth in each one of those areas.

Foraying into e-recruitment where the core business is into staffing was a huge mistake. Trying to become a portal was not a good idea. We burnt a lot of VC money. The era was based on eyeball oriented behaviour.

E-recruitment is a business by itself. It cannot co-exist with the staffing business.

Share two lessons you have learnt that stand out in your entrepreneurial journey that has made you build a successful enterprise.

We believed in creating a strong eco-system. Every employee felt that he/she owned the company. We shared equity with all the key employees. Creating the sense of ownership, I believe, is critical to the success of building any type of business.

Scale, scope and depth are important. Scale gives the perception of stability. Scale with depth gives real stability. Depth being ignored is an important lesson for me. Recognise scope as an important dimension. Often people mistake the widening of scope means growth. Widening and reducing scope as we address the market is essential. Most problems in growing enterprises arise because of an imbalance in one of these. For example, scaling up a company too fast without creating adequate depth will lead to an imbalance.

Entrepreneurship has changed its flavour over the years. Looking at the current young entrepreneurs, what is your advice?

I have personally invested in many ventures. Often times playing for valuation seems to take precedence over building value. This is an era of private equity, venture capital, strategic investors, angels. What tends to suffer is before you create value, entrepreneurs are playing the valuation game to address the investors.

Creating value lies in building a business, having happy employees and customers.

(The author is the CEO of Energeate, an advisory firm for early stage ventures and cross-border companies. He is a Charter Member of TiE Chennai.)