KALAKRITI: Resignation of an Executive

Pradeep Kumar Mishra1

Ms. Ruchi Sharma, Chief Executive of KALAKRITI, was troubled by the resignation of an
executive. The employee in question was Mr. Ramesh Kumar, who worked in the organization for
about a year. The problem arose when Mr. Kumar’s salary was decreased after an auditor’s remark.
Later the executive resigned and claimed that the differential salary should be paid. Had it been
any other employee, it would have been an easy call. Mr. Kumar held important responsibilities
and he was the key person managing the most ambitious project implemented by KALAKRITI. It
was difficult for Ms. Sharma to replace a person of similar profile. Moreover, it was a government
funded project and as per rules, she could not take any decision unilaterally, she must consult other
important stakeholders.

Background: KALAKRITI was a social development organization working for the promotion of
tribal arts and crafts in Bastar district of Chhatisgarh. The organization was established 1998, when
Ms. Sharma completed her studies and decided not to go for a job, rather commit her life to social
work. She belonged to Jagdalpur, the district headquarters of Bastar district, one of the most
backward places of India, also infamous for being the centre of maoist activities. The organization
had a mission stated as, ‘To organize, steer, and facilitate the rural poor to establish themselves as
empowered entrepreneurs to create a hub of rural enterprises’. The organization was run by the
Chief Executive with guidance from a Board of Governors, which had nine members – four of
them were artisans, others were people of reputation like retired government officials, and bankers.
In the past, the organization had undertaken many social development interventions in the area
particularly dealing with betterment of livelihoods of artisans. Most projects were funded by
various central and state government agencies.

Cluster Development Project: In 2015, KALAKRITI had applied for funding a cluster
development project to Village Industries Department (VID), which was approved and the project

1
Assistant Professor, Xavier School of Rural Management, Xavier University Bhubaneswar.
Note: Please do not cite this without the authors’ permission.
Cases are designed for classroom discussion and they do not represent proper or improver handling of managerial
decisions.

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was awarded to the organization. The objective of the project was to organize the artisans
associated with bell metal, brass metal, jute-based, and embroidery based handicraft works and
develop some common facilities where they could process their products and sell it with a good
margin. It was an ambitious project, and it had a budget of about INR 9.8 million. This was a
significant budget for the organization. In the previous year, the organization had a turnover of
INR 7.0 million. In implementing this project VID and a Technical Agency (TA) provided
continuous support.

Hiring of Development Executive: In awarding the cluster development project, VID had put a
condition that a Development Executive must be appointed for running this project. The position
was an important one and had the overall responsibility of managing the operations of cluster
development (details in Appendix – I). The eligibility criteria was that the candidate should be a
post graduate (management or social work) and should have three years relevant experience in
cluster development work. In September 2015, an advertisement was published in a state-level
newspaper and applications were invited for this position. After scrutiny of the pool of
applications, five candidates were shortlisted. An interview was held in Raipur (state capital) at
the office of VID. The State head of VID office in Raipur, representative of TA, and Ms. Sharma
were in the interview panel. There was one bright candidate, Mr. Kumar, who met all the eligibility
criteria and his performance in interview was significantly better than other candidates. In fact,
earlier he was associated with KALAKRITI for a short-term project, and Ms. Sharma also knew
him. The only problem was that the salary offered to him was lower than what he expected.
According to the programme guidelines of VID, a Development Executive would be paid
INR15,000/- per month. But Mr. Kumar said that he already received INR22,000/- in the existing
job. The interview panel felt that if the project was to be managed well, then an appropriate person
had to be recruited. Finally, it was decided that he would be offered INR20,000/- per month. Other
than this, there was already a provision of INR3,000/- per month for conveyance and other
expenses. Effectively he would receive INR23,000/- per month.

Activities: Mr. Kumar joined as Development Executive in KALAKRITI, Jagdalpur in November

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was not circulated in advance and a comparative statement of quotations (the meeting was meant
for taking a major purchase decision) should have been made available in the meeting which was
not done. After the meeting Mr. Kumar drafted the minutes of the meeting which the VID
representative told that it was not up to mark.

Later, Mr. Kumar prepared a monthly report, which was trashed by the State head of VID.
According to him similar report prepared by another cluster’s executive was excellent. He further
said, ‘We are paying him beyond what was provided for, you cannot settle for substandard
performance’. To his defence, Mr. Kumar told that he was operating under the guidance of Ms.
Sharma.

Auditor’s remarks and revision in salary: Around the same time, the Government auditor had
some observations on the financial management of KALAKRITI. One of the paras of auditor
included a point on why the salary of the Development Executive was higher than the limit
provided in the programme guidelines. Based on the para, the State head of VID Raipur office
wrote to KALAKRITI that Mr. Kumar’s salary should be decreased to INR15,000/- per month. In
October 2016, Ms. Sharma issued a letter to Mr. Kumar and conveyed this message to him and ask
him to provide his consent.

On the same day Mr. Kumar wrote back that it was unfair to decrease his salary as he had left a
higher paying job. He already had communicated it earlier during the interview process conducted
for his selection. He wrote that it was not acceptable to him. However, he continued attending
office. For the next three months (October, November, December) he received INR 15,000/- each.
During this period, there were a few arguments between Ms. Sharma and Mr. Kumar on various
programmatic aspects. For example, an exposure visit of artisans was supposed to be for three
days, but Ms. Sharma cut it to two days and Mr. Kumar was not happy about it. In another instance,
Mr. Kumar was not sent to a national level seminar (where he was supposed to attend).

Resignation: In the first week of January 2017, Mr. Kumar wrote a letter addressed to Chief
Executive, KALAKRITI that the balance amount of INR 15,000 should be paid to him (differential
salary of three months @INR 5000 per month). Ms. Sharma told that it would not be possible, as
she had acted under the clear instruction from the State head of VID. She also told that he was not
performing well and the door was open to him. Next day, Mr. Kumar sent an e-mail as follows:

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Dear Madam,

As my salary has been decreased from INR 20,000 to INR 15,000/-, I hereby put my
resignation with immediate effect. After the scolding I received yesterday, I do not intend to
continue anymore. As per my original appointment letter, either party (I or KALAKRITI) can
terminate the contract at one month’s notice. I am ready to serve one month’s notice subject to
release of the differential amount of INR 15,000/-. The files and papers of the project are in the
Almirah, I have handed over the key to your Assistant. The password of the email of the Cluster
Development Project is ‘********’.

Yours faithfully,

Ramesh

Two days later Ms. Sharma wrote a letter that Mr. Kumar’s resignation was accepted. However,
she requested him to serve one month’s notice and complete the formal handover process.

Towards the end of February 2017, Ms. Sharma received a notice from a local advocate that his
client Mr. Kumar was harassed and forced to resign. The letter mentioned that it was a breach of
contract to decrease his salary unilaterally. He had demanded that the differential salary of
INR15,000/- should be paid to Mr. Kumar within 45 days of receipt of this notice. Copies of the
notice were sent to the State head of VID in Raipur as well as the representative of TA who were
part of the interview process in which Mr. Kumar was selected.

Ms. Sharma was furious. ‘How could Ramesh do such thing? I did not decrease his salary on my
own. In fact, I could have demanded one month’s salary from him because he did not serve the
notice period’, she said. ‘I have heard that his is involved in maligning the organization too;
Ramesh told a government official that there is embezzlement of funds in the project.’

She called the representative of TA who looked at the letter of the Advocate and said ‘It would be
better to pay the differential amount. You should have terminated his contract before you reduced
his salary. The cost of legal proceedings would be much higher even if you want to fight the case
in the court of law.’ Then she called the VID office only to learn that the head has been transferred
and a new officer would soon take over.

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Ms. Sharma felt that it would be too much of lenience to let Mr. Kumar get the payment unless he
served the notice period. She felt, the act of Mr. Kumar amounted to extortion. In any case, she
had to take some strong action, otherwise the organization would lose face in government circle.

APPENDIX-I: JOB PROFILEOF DEVELOPMENT EXECUTIVE

The Development Executive are as follows

1. To be the full-time manager of the cluster with the sole responsibility of executing the activities
within the cluster in a timely manner
2. To assist the Technical Agency and the Village Industries Department in preparing the
Diagnostic Project Report, and Detailed Project Report for the cluster
3. To visit the cluster regularly and interact with the artisans
4. To promote people’s institutions for management of the cluster
5. To develop proper linkage and coordination with all concerned agencies for promotion of the
cluster development programme
6. To perform any other assignment given by the Village Industries Department for the cluster
development work
7. To report to the Village Industries Department and the Technical Agency on an monthly basis
on progress of the cluster