Sunday, April 10, 2016

Put formal HR function in place and strengthen it

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine April 2016 edition.

Akshay Sales Corporation is a partnership firm established in the year 1994 at Surat, Gujarat. The founder and the CEO of this firm is Mr Amar Patel. This firm is the distributor, wholesaler and supplier of all types of wood working, laminate pressing, shoes PU adhesive and SR rubber adhesive for foam and flooring and mattress. Akshay is one of the top five performers in this type of business out of about 50 Small and Medium Enterprises (SMEs) in its region of operations. Being an experienced firm it also enjoys good competitive edge over others in business. The average turnover of this partnership firm is Rs. 24 crores whereas the strength of its workforce is 348 employees including clerical supervisory and managerial categories.

Akshay is well known for achieving customer satisfaction, ensuring timely delivery, innovating new designs, and honoring commitment to buyers. However, the critical and thorny issue of this firm is the talent management and retention. The human resource management system of Akshay is very much traditional and similar to any typical Indian SME. This firm does not have a specific manager or officer with HR responsibility. Most basic HRM functions such as recruitment and salary fixation are done by the line managers either by themselves or in consultation with the CEO of the firm. In recruitment it seeks professional competencies among the potential candidates and also offers competitive pay packages. In most cases the promotion is given to the employees based on the assessment and recommendation of the line managers.

As regards the talent management, the major problem for Akshay is in retaining the talented people with the firm for longer duration. This problem persists despite the abundant availability of skilled people in labour market. Akshay offers financial incentives to employees at highly competitive rates as a retention device but without much success. The firm has no record of conducting any form of formal skill training for its employees. This is because the CEO of the firm Mr. Amar Patel strongly believes that employee training can only worsen the problem of talent retention as the well-trained employee is more likely to leave the firm-seeking greener pastures. Consequently, this firm ruled out training as a solution to the problem of high attrition. In Akshay, the attrition related issues remain untamed and continue to affect the plans and future growth prospects of the firm. During temporary recession, it was decided lay off the people to lessen the wages cost resulting in to draining out the talent people. Remained only were average performers. After recovering from recession, when managers reached out to sacked people offer them to rejoin, it came out as a shocking surprise to the management that most of them refused to rejoin on some pretext or the other. Now the problem before the managers and CEO is to employ not only the good people but also to retain them. The organisation suffered business as it started getting complaints about poor logistics and quality of products. In all likelihood, this issue may worsen in coming times as the competitors may adopt aggressive style with using their ex-workers knowledge about the important business information of Akshay Sales corporation. CEO has asked the managers to come forward with a blue print to address the problem.

Questions for discussions
  1. What is your assessment of the whole situation in Akshay Sales Corporation from HR perspective?
  2. According to you what specific steps are to be taken by Akshay to tackle the problem of rising attrition rate?
  3. What should be long-term strategy of this firm in terms of HR policy, procedure, and practice?

Established in 1994 in Surat Gujarat, Akshay Sales Corporation, a partnership firm headed by Amar Patel is a leading top 5 distributor, wholesaler and supplier of all types of wood working, laminate pressing, shoes PU adhesive and SR rubber adhesive for foam and flooring and mattress in the SME Segment. The company being well established & experienced in its line of business enjoyed a market competitive edge. It was well known for achieving customer satisfaction, ensuring timely delivery, innovating new designs and honoring commitment to buyers. The company clocked a turnover of 24 crores and had a workforce strength of 348 employees across all cadres.
Akshay Sales Corporation was doing very well as far as its business was concerned however like all traditionally ownership managed companies, it was facing the challenge of managing attrition. The company did not believe in having a full time professional HR team. The HR functions like recruitment, salary, promotion, etc…were managed by the functional manager’s themselves in consultation with the CEO. Hence there was never a full-time HR person looking into all HR functions and issues given that the company had 348 employees but the functional manager’s themselves managing it as additional responsibility whenever it came up. This was the first HR issue facing the company and probably the root cause.
Secondly promotion was based on assessment and recommendation by the managers to the CEO. Hence the company lacked a formal employee evaluation, feedback and promotion methodology. Chances of bias coming in as a consequence were very high and disgruntled employees leaving the company simply because of them being overlooked for promotion were there. This was another issue facing the company in talent management & retention.

Thirdly there was no formal training plan on upgrading the skills & competencies of the workforce in line with the changing dynamic business environment. The CEO believed that by training it’s employees, they would seek better prospects. Mr. Patel should have thought for himself and for his company as to what is suited to his buiness strategy better – having a well trained employee and performing or rather having an employee who is not performing and not trained and as a result is stuck in the same job in the same company. There is absence of an strategy or lack of direction as far as employee skills up gradation and training goes. 

Lastly when there was slowdown in business, the company decided to reduce its employee strength to lessen the cost of wages on its balance sheet. As a result, talented employees left the company and only average performers remained. When the recession tide was over, the company reached out those sacked employees and offered them to rejoin which they vehemently refused. As a result, the company’s business suffered and it started getting complaints about poor logistics and quality of it’s products and services. There were chances that the sacked employees would join other competing firms and that they would use their knowledge about the important business information of Akshay Sales corporation thereby threating it’s immediate business prospects and long term sustainability. Clearly this act states lack of long term HR vision of the company, about where it wants to be and where it wants to go as far as its employees are concerned. All these actions are short-term minded. There is no long term Focus on the Future.

In any industry, employees are to be treated as assets of an organization and not as costs. Also the HR function should be on par with the business functions of the company and not treated merely as side function doing only recruitment & salary.

The following few steps should be taken by Akshay Sales Corporation immediately to tackle the problem of rising attrition rate and other HR related issues plaguing it.
Firstly appoint an experienced, professional and full time HR Head who is preferably from the same industry background as Akshay Sales Corporation so that HR function is in tune with the business activities, it’s requirements and can fully support it.

Secondly the HR Head should be empowered to take decisions for betterment of the company. HR should be allowed to function independently reporting directly to the CEO. By allowing HR to function independently as if it were a business department itself there would be reduced chances of biasness in its activities and as a consequence there would be healthy work environment in the company.

Third introduce Compensation, Recognition, and Rewards / Incentives to retain it’s existing employees as well as to recruit and hire new talent. These should be influenced purely by performance measures and for generating business growth ideas and reinforcing them on the job. By introducing such Rewards & Recognition schemes, the employees will get a sense of belonging to the company and will feel valued. Thus they will get more engaged with the company which is not so in current scenario and an engaged employee will perform more and contribute more to the growth and development of the company. As an employee grows, the company also grows and the same hold true in reverse.

Lastly but the not least, Develop training plans based on employee and manager input. There should be clear linkages between the business strategic objectives of Akshay and education and training. Skills to be developed based on business demands and employee needs.

The long term strategy for Akshay Sales Corporation in terms of its HR Policy, Procedure and Practice should be to invest in their employees to ensure they have the skills for today and to do what is necessary to succeed in the future. The CEO should aim towards building a work climate that addresses the needs of its employees. Recruitment and training are tools to enhance the work climate. Employees should be incentivised such as bonuses or other rewards, for developing additional career-enhancing skills. Provide for employee support and benefits depending on their different needs like health care, education (both work and non-work related), maternity, paternity and family – illness leave, etc…Make available special activities and services for the employees.

Develop formal career plans for each employee. Evaluate progress against the plans and make adjustments where necessary to ensure that they remain relevant. Companies that provide career development opportunities are four times less likely to lose talent in the next year than companies that do not. 

Sunday, March 27, 2016

Why People Leave?

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine March 2016 edition. 

Arvind Suiting’s a global textile company is based in India. The company has presence in more than 35 countries. It has succeeded in getting a decent share in an increasingly competitive global market. It has employed more than 5,800 employees. This company always views its employees as its strength and as the secret of its success. It has got several HR practices oriented towards employee satisfaction and motivation. The uniqueness of the HR practices of this company are (i) its accent on extensive training programme for its employees during their probationary period of two years and (ii) its compensation packages, which are excellent for the industry. The HR department of the company is managed by Mr Ravi Varma, a post graduate in Human Resource Management.

However, the company has been plagued by quite a few HR-related problems in the recent past. One of them is the high rate of attrition witnessed by the company, especially among the employees promoted to the higher position in the organization. Some other recently promoted employees were asking for reversals to their original position. Apparently, the company was perplexed by the developments as the employee leaving the organization were indeed performing activities critical to the organization. The company took the matter seriously and was determined to identify its reason. It appointed a team of HR experts to look into the issue and suggest necessary remedial measures.

The team approached all the employees who were leaving the organization and conducted an exit interview to ascertain the reason for their quitting the firm. It also interviewed the employees who applied for reversals to their previous positions. Similarly, it interviewed all the existing employees in that cadre as on that date. Finally, it went a step ahead and contacted the employees who had already left the company in the recent past and elicited their views on the different aspects of employment and the reason for leaving.

Shockingly, almost all the employees spoke negatively about their job. They also informed the team about the presence of an anomaly in authority, responsibility and accountability. A number of them perceived a lack of fit between the level of authority and responsibility. They opined that the job carried too huge a responsibility but provided little authority for the job holder. They also revealed that the lack of demarcation of job authority of different employees often led to misunderstanding and quarrels with their subordinates. Several employees felt that the compensation package was not commensurate with the difficulty and accountability of the job. Based on its interviews with the present and former employees, the team of HR experts prepared a report and presented it to the top management. The report squarely blamed the job analysis report (that had been made earlier) and the resultant HR practices as responsible for the present situation. It held the job analysis report as poorly investigated and drafted. The HR manager was asked to respond to the report and present his own report about the situation. In his report, the HR manager cited the lack of cooperation of the employees for job analysis exercise as the reason for inaccuracies in the job analysis report. However, he strongly defended the methods and techniques adopted in the job analysis process.

Finally, the company decided to undertake a fresh job analysis for all job titles and integrate the information with the HR practices by revising these practices thoroughly. An external HR consultancy agency with relevant expertise in job analysis was hired this time to prepare the job analysis report even though it charged a high fee.

Question for Discussions:
  1. How do you view the developments in Aravind Suitings from your perspective?
  2. Do you agree with the findings of the team of HR professionals regarding the recent spate in employee resignations and requests for reversal?
  3. What is your response to the report of the HR manager Mr. Ravi Varma blaming employees for the defective job analysis report?
  4. Do you have any alternate suggestions for controlling attrition in Aravind Suitings?

Arvind Suitings, an Indian textile company having 5800 employees & a global presence in more than 35 countries views its employees as its assets and key to business success. The objective of it’s HR practices are employee satisfaction & motivation resulting into the company having extensive training for it’s employees who are on probation and excellent compensation packages that are the best in the industry. Recently, the company is facing a challenge that of employees leaving the company especially those promoted to higher positions or employees asking for reversal to original position.  The company appointed a team of expert consultants to look into the matter and based on extensive interviews with different cadres of employees by they found ambiguity in job profile as one of the main reasons. Job responsibilities and authorities were not properly defined and the pay offered was perceived to be less as compared to the huge amount of responsibility it carried. The HR Manager Mr. Ravi Varma cited lack of co-operation of the employees when carrying out the job analysis exercise for the inaccuracies.

Employees and first-line supervisors who are closest to the work usually understand best what skills are required (and missing) to do the work effectively. Failure to obtain and use input from these employees may result in the development of inappropriate or ineffective training opportunities and it’s resultant application on the job. This is exactly what has happened at Arvind Suitings & has led to waste of its Human Resources. Although the HR Manager has cited lack of co-operation by the employees, it is HRD’s responsibility to get the work done properly and implement it effectively. Simply blaming the employees as an excuse cannot be tolerated as they have their own line functions also to look into.

Has the HR Manager Mr. Ravi Varma communicated to the employees the objective of the job analysis exercise? Has it been perceived rightly by all the employees? Incase of improper communication, employees may take it in wrong sense and start looking out for other options. If the HR Manager spoke about lack of co-operation from the employees, he must realise that it is almost impossible to get real and genuine data without the support of employees. if they are not ready to co-operate, it is a sheer wastage of time, money and human effort to conduct job analysis process. The solution is that of taking the workers in confidence and communicating to them that it is being done to solve their problems only.

Companies must look at recruiting, hiring, placing, and retaining employees who will meet skill requirements required to position it for future success. Obviously the right employee is a key factor in this. This has also not quite exactly happened at Arvind Suitings resulting into employees leaving the organization or requesting for reversal to their original function.

If the HRD had indeed a problem in carrying out this exercise effectively, has it proactively communicated it to the Management of Arvind Suitings for their support. That could have eased out matters somewhat as compared to the current situation that the company is currently facing in having it reviewed by a team of external HR consultants and then appointing an external HR consultancy agency with relevant expertise in job analysis to prepare the job analysis report.

Alternative suggestions for controlling attrition in Arvind Suiting’s, one of them could be to have self-directed or self-managed work teams throughout the organization. They should be having authority over their relevant matters because this was the current problem faced. Secondly the HRD should conduct systematic job needs analysis to ensure that skills required to perform work are routinely assessed, monitored, and maintained. Employee opinion should be regularly sought (and obtained) regarding job design and their work process management and improvement. This should be a part of yearly routine activity with frequency to be defined.
Since Arvind Suitings has oriented its HR practices towards employee satisfaction and motivation and views extensive trainings as one of the indicators, it could systematically evaluate training effectiveness on the job. Performance data to be collected on all employees at all levels to assess the impact of training. Prompt and regular feedback should be provided to teams and individuals regarding their performance. Employee satisfaction with the courses to be tracked and used to improve training content & training delivery.

Saturday, February 13, 2016

Respond Effectively to Changed Circumstances

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine February 2016 edition.

Case Study - Is Metrics Panacea for all HR Problems in Century Software?

Century Software is one of the leading technology based companies engaged in management consulting, technology development, and outsourcing services. This company is well known for its innovative approach towards delivering business value and its commitment to sustainability. It aims at optimized utilization of natural resources, capital, and talent. It is engaged in activities like Big Data Analytics, Operational Analytics, and Supply Chain Analytics. It has 1 25,000 employees on its roll and offices in 110 cities around the world. The net revenue of this company is Rs. 13.0 billion for fiscal year 2014. In Century Software, people management cost constitutes nearly 59% of total expenses.

The HR department of this company is headed by Mr Easwaren, one of the senior leaders in the company. However, in recent times, the CEO of the company Mr Mahendra Singh has lot of worries about the functional efficiency of HR department especially in the context of serious erosion of manpower in Big Data Analytics - one of the core departments. The high attrition rate in this department has caused consternation among the top managers. The CEO and his team is wholly aware of the fact that the HR department has taken the issue seriously and conducting exit interviews to understand the root cause of the problem.  They also regularly collect information on absenteeism and turnover. However, the irony is that the top management is not informed of outcome of such exercise in desirable and actionable form for initiating necessary action. The absence of actionable report about the HR problems of Big Data Analytics department kept the top management always in tenterhooks. This is because the good and consistent performance of this department is essential for the execution of the strategic and operational plan of the whole organization.

Of late, the top managers began to believe that HR is not supporting the strategic agenda of the company. They are now toying with the idea of changing the leadership in the HR division and also effecting radical changes in the structure of the HR department.

Questions for discussions and solutions

1) Do you agree with the opinion of the top management that HR department is not effective in handling the attrition and absenteeism problems of Big Data Analytics department?
It is to be noted that that in Century Software, a management consulting, technology development & outsourcing services company having 1,25,000 employees on its payroll, offices in 110 cities globally, the people management cost constitutes nearly 59% of its total expenses. Hence it is but natural that Top Management would be concerned about the efficiency of the HR department since a sizeable portion of its revenue vis a vis expenses goes to people management. The Top Management would be looking at optimising its cost per employee of its various business departments vis a vis the revenues generated and their contribution to the overall revenue of the company. 

In the case of Century Software, one of its core departments Big Data Analytics is facing a serious erosion of manpower and has a high attrition rate. Although this issue has been identified, serious taken note of and actionable measures like Exit Interviews undertaken to get to the root cause of the problem, still there has been no significant improvement observed in stemming the flow of people leaving the organization. Hence the Top Management who would be monitoring the situation and evaluating the results of the actions taken, it’s effectiveness would naturally be concerned. If it is being reported to them by HR Head that action is being undertaken, Top Management would be looking at results, better changes and improvement in the scheme of things to come. However that was not to be seen or evident. Hence the Top Management is bound to be opined that HR department is not effective in handling the attrition and absenteeism problems of Big Data Analytics department. 

2) According to you, what needs to be done by the HR department from HR metric perspective to tackle the situation?
The HR department in order to tackle the situation from HR metric perspective should have regular reporting to the Top Management. A frequency to be defined. The HR metrics data should be collated, analysed and reported to Top Management with their comments and action plan for the future. Since the time of Top Management is valuable, the information being reported should be that which needs their urgent attention, be short, summarized and crisp. Top Management is not interested in going through volumes of reports and data. They are more interested in the outcomes and results and how it is helping the business. The information should speak the language of the Top Management.

It may help that before deciding on reporting structure, frequency, desired reporting method, etc…inputs from the Top Management to the HR Department be given as to what exact information is being desired and in what manner. Defining, in measurable, outcome-oriented terms. Clarity on this may make things easier and that may perhaps resolve the issue of reporting in desirable and actionable form for initiating necessary action. 

The HR department at Century Software may be using numerous metrics that may be providing information as to how the HR function is performing; however there may be some metrics that may be more important than others depending on the organization’s goals and strategy. At times, it is necessary to evaluate that as well i.e. effectiveness of the metrics being deployed. It may not be a bad idea to ask the Top Management for guidance as to whether this is the information which they desire or is there anything else that is required – what metrics are most important to the organization. Clarity of communication on it may help make the road ahead easier and perhaps keep the Top Management on less tenterhooks of the HR department.

3) If you were to be a HR consultant, what will be your specific suggestions and strategy to improve the efficacy of HR department?
If I were to be a HR consultant I would first of all look at the entire HR Metrics structure itself, look at the metrics being used and information being generated out of it. Four crucial considerations that need to consider when using HR metrics include:
•What metrics are most important to the organization?
•What data needs to be gathered or tracked to calculate these metrics?
•How will the data be analysed and benchmarked?
•How will the analysis be used for action planning, development/improvement, and problem-solving?

If the metrics do not satisfy any of these crucial considerations, then it needs to be looked at as to whether it makes sense to gather so much data and report when it is not really useful. Sometimes it is prudent to have only few metrics that are in line with the business requirements of the organization as compared to having many. Too much volume of data may lead to information overload and chances are that in it one may tend to miss out on crucial details that get hidden / over sighted in tonnes of data.

Have a Dashboard. A dashboard facilitates effective monitoring at all levels and makes management of implementation and related actions easier. A good dashboard that provides measures of leading indicators to help the Top Management understand what is important to the employees, how well it is delivering on those things that are important, the reaction of its employees, and the capacity of its work processes and delivery systems. With this advance knowledge, Top Management can make better decisions about the actions needed to be successful, bring more value to the workplace, and respond effectively to changing circumstances and new opportunities.

Saturday, December 5, 2015

Feedback to Rejected Was Missing

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine December 2015 edition.

Case Study - The Cause of Concern in Internal Recruitment

Hirthick & Co is a popular company engaged in textile production. It has production sites in three different places. It produces high-value pure-wool, wool-blended and premium-polyester-viscose-worsted suitings. Hirthick enjoys a sizeable market share for the finest fabrics and designer wears. 
In fact, this company has a large variety of worsted suitings to cater to the needs of the assorted customers. The company has a workforce comprising 7,500 employees. The HR department is headed by Mr Uday Shankar, the General Manager (HR). The company has HR policies and practices for almost all its staffing activities.

Hirthick's promotion policy stipulated that the company adopt internal recruitment for non-managerial and entry-level managerial cadres as a first choice, whereas, for all other ranks above the entry-level managerial position, external recruitment should be the only option. The company had a smooth sailing on the manufacturing front till a few weeks ago when Mr Suresh Kulkarni, the production chief at the level of general manager, submitted his letter of resignation. He cited personal reasons for his decision to leave the company and all the efforts of the management to persuade him to take back his resignation failed. Left with no other option, the management instructed the HR department to begin the separation process for Mr Suresh Kulkarni and the recruitment process to fill the consequent vacancy.

As regards the recruitment of a new incumbent for the vacant position, the management was in favour of external sources of recruitment as per the policy and they wanted the General Manager (HR) to search widely to choose the best candidate for the job. However, Mr Uday Shankar had different ideas for the post as he wanted to fill the vacancy by providing promotion to one of the three production managers in charge of the three production units of the company. These senior production managers had been with the company for quite a long time and had nearly unblemished service records. He believed strongly that the promotional opportunities can motivate these managers and improve their morale greatly. Therefore, he made a request to the top management for exempting this job position from the general promotion policy on a trial basis. The top management agreed to the proposal reluctantly and permitted the GM (HR) to proceed with his plan to fill the post by promoting one of the production managers as GM (Production).

As per its general promotion policy, the company adopted merit as the sole criterion for choosing the best candidate for the post. The HR department, after a series of promotional selection processes and due consideration of the past performance records of the three production managers, chose one of the managers as GM (Production). However, the promoted manager happened to be the youngest of all the three managers and had the least number of years of service in the company. The top management approved the selection done by the HR department and issued the job-offer letter to the selected manager accordingly. Soon, the news of the selection spread and the unsuccessful man-agers expressed shock and disbelief as their first reaction. They could not believe that they were less efficient than the promoted manager. They expressed their displeasure to the top management and faulted the HR department for not selecting them.

The efforts of the management to convince them bore no fruits. Their performance began to decline and they showed all symptoms of leaving the organization early. In contrast, promoted manager in his capacity of GM performed brilliantly and justified his selection. Thus, the decision of Mr. Uday Shankar produced mixed results for the company.

Questions for discussions & solutions

1. Do you agree with the decision of Mr Uday Shankar in resorting to internal recruitment for the GM (Production) post?

Yes, I agree with Mr. Uday Shankar – GM HR’s decision in resorting to internal recruitment for GM (Production) post even though the company policy stated that for all ranks above entry-level managerial position, external recruitment should be the only option.

The objective of this decision by GM HR was to promote leadership from within the organization with proven capability and track record rather than bringing in an outsider. Also internal recruitment helps to fill in the void position faster as compared to external sourcing which is a time consuming and costly activity. This would also motivate the employees as they too seek career growth opportunities at some point of time and are glad to see opportunities within the organization. Internal promotion also acts as a retention tool.

Managers have a responsibility to help employees attain their job and career progression development objectives. These provide evidence to workers that they are valued by the organization and its leaders. This, in turn, enhances employee engagement, which enhances productivity.

An internally promoted employee would know the systems and processes of the organization far better and be in a position to deliver quicker, better and faster results as compared to an outsider who would obviously need time to settle down in the new profile and understand how things work in the organization before getting to the task in hand for which recruited.

2. Had you been the GM (HR), how would you have filled up the post of GM (Production)?

Had I been the GM (HR), I would have first determined the knowledge, skillsets, attributes,             nos. of years of experience required for filling up the post of GM (Production) left void by               Mr. Suresh Kulkarni. Setting clear communication rules for the internal hiring process is vital. 
This was missing in case of Hirthick & Co’s context.

An internal recruiting policy needs to be made that will specify who can apply for internal vacancies and provide full details of open position i.e. salary, benefits, time frame an employee needs to be in his or her current position before applying for new one, etc…Although the HR Department followed a promotion selection process and gave due consideration to past performance records of the three production managers whom it had shortlisted for GM (Production) vacancy, some of the questions such as these need to be considered when establishing the company’s internal recruiting policy.

Offer feedback. Always tell candidates if they weren’t selected and why. It is to be noted that this was missing in the internal hiring process for GM (Production) at Hirthick & Co. Out of the 
3 candidates shortlisted, the unsuccessful 2 were not offered feedback as to why they were not chosen. Hence when the news broke out, shock & disbelief was the first natural reaction. If there had been some form of communication, then things would have been better managed.

From the outset, make it very clear that the organization follows meritocracy. If clear expectations are set, then these type of issues have minimal negative consequences.

3. According to you, what is the solution to the problem arising out of the internal recruitment?

When a higher post is given to a deserving employee, it motivates all other employees of the organization to work hard. However in case of Hirthick & Co, it led to resentment amongst the other 2 unsuccessful candidates. They could not believe that they were less efficient than the promoted manager and vehemently expressed their displeasure to management & HR dept. Although management tried to convince them, the efforts bore no fruits and there were indications that they would leave the organization.

Outline the promoted employee’s successes within the organization so that the other two know the things they don’t have to focus on. Then, as tactfully as possible, outline the areas where they need improvement so they can position themselves for that promotion in the future. That way, they clearly understand what they need to work on.

Honesty is crucial when delivering news in regard to a promotion. Inform the two employee's who were not promoted about the decision, and then tactfully explain the reasoning behind it.

Another solution is to get them a new internal position based on merits on an immediate basis. Delay in doing so will breed further resentment amongst them and ultimately leave Hirthick & Co with the problem it’s trying to avoid anyway.

It is easier to break challenging news when there is an alternative career plan available for an employee to go. Employees who see a future in the company, an opportunity to move up in title, a more challenging role and higher compensation tend to stick around, even if there is a setback. If they know what their target is, and there is transparency, the conversation is much easier to have!

Sunday, November 1, 2015

Hiring Process Lacks Basics

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine November 2015 edition.

Case Study - Why Mayank did not join?

Mr. Bajaj’s day was spoiled. It was month end and all financial reports were to be sent to CEO after collecting and compiling data from different business centers. Being financial controller, he was to ensure that his people deliver as expected. It was 11 Am and till that time he did not get the clue from Rahul as what was happening. Rahul joined this organization six months back as management trainee in finance department. He was chartered Accountant. His role was to get various financial reports from different facilities, compile them, put before Mr. Bajaj, for his finishing touch and finally to be sent by Mr. Bajaj to CEO. Bajaj was checking his inbox. After the mail of Rahul having reports, next was of his resignation. 

Rahul, who was merely a "trainee" having no visibility all of a sudden became very important for Me. Bajaj. He called and counseled rahul to stay back even offered to raise his salary by Rs.10k but he did not budge. He told that he will not come from next Monday. It was Tuesday Means only six days left. 

Bajaj gave a call to Mitra, Recruitment head. The conversation held between them was: 

M- Hi Bajaj ji, How are you? 

B- Not good yaar.. That CA, rahul you gave me six months back has resigned. He will leave by Monday. These young boys don't know what they think of them…. totally irresponsible and negligent. Give me some good boy this time... You HR guys also don't put your best while recruit. This time put a condition of three year bond. We can't be left behind like this. I want the replacement by Monday. 

And the call ended. 

Mitra was perplexed. He was not sure how he will meet this dead line. He searched his data bank. Coincidently, He laid his hand on a CV of a boy mayank who recently passed his CA. Mitra asked her subordinate Ruchi to coordinate for immediate interview. She gave a call to that boy. Here is the conversation: 

R-hello, I am calling from ……. co. we have your CV. Pl. come for interview tomorrow. 

Mayank- But mam can I come day after? 

R- No... No... You have to come tomorrow only otherwise you will not get this chance. 

Mayank- Ok. Mam.

Next day mayank reached office of the company. But at reception when asked, He was unable to refer the name who called her for interview. Ruchi did not tell her name. Mayank could simply tell that he got a call from this office for the interview in finance department. Receptionist inquired from Finance whether mayank was called for interview. She could not get any clue from finance even. Mayank showed her the mobile No. from call list in mobile. Receptionist then could identify that it was Ruchi's number. She gave call to Ruchi and informed about Mayank waiting at reception. 
After some time mayank was called in.... Ruchi directed him to meet Mr. Bajaj for interview. Mayank reached to Bajaj office on next floor. He was made to sit waiting for about an hour. When called in, Bajaj asked — where is your CV? 

Mayank gave copy of his CV from his document folder which luckily he carried with him. 

Interview questions: 
B- Sit down. 
M- Thank you sir. Mayank sat on the chair. 

B- So you did your CA... All in one attempt... Good. 
M- Yes sir... 

B- You will be here as management trainee and will be responsible for MIS. Is It OK? 
M- (Kept quite) 

B-I am also CA. You will report to me directly. But you have to execute three years bond. We don't want that people come here, work for few months and leave us. 
M- (Kept quite) 

B- Your salary will be … ( Bajaj Quoted some figure) 
B- Join from Monday... take this CV, and meet Mitra... 
M- Ok sir... 

Bajaj handed over his CV back to mayank. Mayank read the comments written on his CV while getting down to the floor.. Bajaj wrote — selected. 

Mayank again went to Ruchi and gave that CV to her and asked for Mr. Mitra.

Ruchi told her to wait as he was in lunch. Mayank waited for about 45 minutes. He could make out that mitra was HR/ recruitment head. 

In the meantime mayank went to wash room. One more person entered wash room behind mayank. 

Their conversation: 
P- Have you come for interview? 
M- Yes. 

P- For which post? 
M- Don't know. I am CA. just Passed. Not aware what post will be given. 

P- Hi... I am also CA. Hopefully you are for replacement of Rahul who has just resigned. 
M- Why he has resigned? 

P- Here people come and go. I will also leave shortly. Till you get a good job, it is not bad to pass some time here. 
M- But they are asking for three year bond that too as management trainee. 

P- But nobody has so far been asked for any bond. Nor I executed. 
M- Why for me then..? 

P-Don't know. 
M- How is the company? 
P- Agar kahin job nahi mile to theek Hai... 

Both came out of the wash room. 

Mayank was called by Mitra. Their conversation: 
Mitra- Sit down mayank.. Congrats.. You are selected. 
Mayank- sir, I am told that I would be as management trainee. 

Mitra- Yes. 
Mayank—for how much period? 

Mitra—Need not to worry. We are here. You are fortunate that you got this job.
Mayank- Will I be rotated to other assignments also or will do only MIS..? 

Mitra- How do you think that MIS is lower level work to be done by CA? Is company fool appointing a CA for this work? 

Mayank- three year bond will be from very first day or after training? 
Mitra- From very first day. 

Mayank-what will be the duration of Training? 
Mitra—that will be decided after looking at your performance. 
Mayank-(Kept quite) 
Mitra asked ruchi to give him offer letter. 

Mayank was handed over the offer letter asking him to join by Monday. Mitra gave a call to Bajaj and confirmed that Mayank will be joining by Monday and his problem is over now. But Mayank did not join. After one month Mayank again got a call from Mitra informing about him that co. has waived off his three years bond condition. Mayank did not join even after that. 

Case Study Analysis

1. Discuss the ingredients of Hiring process, style of interviewers, organization culture and why this recruitment failed?

Given the way recruitment was being handled at the company and treatment meted out to candidates who would come for interview, this was a disaster waiting to happen. This scenario also spoke of the disarray functioning of the HR of the company and it’s importance in scheme of things in the company. The company did not value the importance of time of Mayank whom it had called for interview. It made him wait for endless hours to meet the interviewer’s. The company that does not value prospective employee before recruitment, that employee should not expect much after joining. 

Also the interview questions asked seemed to be mere formality and were not meant to judge or gauge the skills and abilities of an aspiring candidate. There was no robustness in the hiring process like a candidate has to go through minimum 3 rounds of interview and meet different people so that the company gets a 360 degree perspective of the candidate’s skills and abilities before zeroing in on the final decision.

HR was merely looked upon as a side function to fulfil manpower needs as and when it arises and other statutory and regulatory requirements like payroll. HR dept. also seemed to be under pressure to fulfil manpower needs on urgent basis as the stem of flow of person leaving the company was high. As one of the current employee’s rightly said about the company that working here is good till such time you do not get a better offer or till you do not have any other job. So the company was basically looked upon as an option when there is no other option. It was not the preferred choice for employment.

There does not seem to exist any recruitment policy or hiring process at the company. If at all it is there, it does not seem to be effective or is outdated. There are no laid down criteria for screening of resumes, shortlisting for interview, skills / abilities to look out for when hiring a candidate, rolling out offer, acceptance of offer confirmation, pre-joining and joining formalities. Even the employee bond execution policy was not fixed nor was probation period of management trainee. It looks like that it all depended on the whims & fancies of the manager / reporting authority and the HR dept. was merely a facilitator of the same. HR had no role or say and had to merely do that which the company wanted it to do.

2. Was managements of the company failed in understanding the GEN Y kind of person and failed to meet the challenge, If so how management should have handled the situation?

Yes, the management of the company had failed in understanding the GEN Y person, his needs and aspirations, what the GEN Y person looks out for when joining a company. Firstly the reason why Rahul had put in his resignation needed to be looked into. If it was an issue related to his job profile or reporting authority, that could have been resolved through discussions and an amicable solution worked out. If Rahul was looking for more things to do in his current profile other than merely compiling data, he could have been given more work opportunities to learn and grow. 

Firstly the objective should have been to retain Rahul. Still if he had decided to move on, then an exit interview should have taken place and corrective measures on Rahul’s interview feedback acted upon so as to ensure that the next candidate joining in his place, same mistake does not happen again.  

Here, it is also to be noted that the onus lies of Mr. Bajaj, Rahul’s manager to train and develop him and make him a valuable asset for the company and thus retain him. How Mr. Bajaj engages with his subordinates and motivates them is also important. GEN Y person’s are constantly evaluating opportunities for themselves like whether they get to enjoy the work that they are currently doing, is it providing them enough learning and growth opportunities, is the work opportunity provided to them meeting their individual career goals, etc…They are looking to engage themselves more with the organization by job sharing and rotational assignments. They would not be merely satisfied with one profile. GEN Y looks at option of job rotation to help them diversify their job portfolio and gain experience in various roles.

Thirdly the Recruitment process is to be well defined and should focus on a combination of technical, behavioral and personality aspects of potential candidate before making final decision.

Fourth is to identify back up for relevant position and Cross training as a measure to be executed to ensure continuity in case of attrition as compared to existing scenario of looking for a replacement when one leaves and that there is no guarantee that the replacement may join in time.

Sunday, August 9, 2015

Audit - An Opportunity for Positive Action

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine August 2015 edition.

Hi-Tech Engineering Services Ltd is a company engaged in the business of offering a broad spectrum of engineering, design and consultancy services ranging from concept to commissioning of all types of engineering projects. It has over 3,200 design engineers and technical personnel employed in various engineering disciplines. It offers the best of the industry compensation packages to its employees, and employee satisfaction is quite high with labour turnover under complete control. 

A few months back, the management of Hi-Tech Engineering Services approved a major expansion plan of the company. The General Manager (HR), Mr. Mukesh, assured the management that the entire hiring process would be completed within three months. However, the General Manager of Marketing, Mr. Ganesh, insisted on an HR audit of all the HR policies and practices of the company before embarking on a major recruitment drive of this nature. Mr. Mukesh opposed the idea of HR audit on the ground that the existing parameters like labour turnover, industrial dispute and profitability showed no abnormality and, as such, the HR department and its practices were, according to him, up to the mark. But, Mr. Ganesh stood his ground and insisted that the company must first benchmark the HR practices through an HR audit before determining the level of HR efficiency. The top management finally decided in favour of an HR audit and also decided to hire external consultants to conduct it. Accordingly, Maxweb Consultants were appointed to carry out the HR audit of the company and the necessary instructions were issued to the HR department to cooperate with them. 

The consultants found the HR practices of their client as fairly effective except in the areas of employee hiring and performance evaluation. The recruitment and selection processes, systems and procedures were identified as ineffective. The consultants observed that though the company offered compensation packages that were the best in the industry, the company was not so successful in attracting the best talents due to a few limiting factors in the HR policies and practices. 

The HR audit report included a number of recommendations to improve the ability of the company to attract the best talents. For example, one recommendation was to revise the hiring philosophy of the company. One of the most immediate tasks set for the HR department was to redraft the job specification statement with increased emphasis on the multi-skills of the prospective applicants. The other major recommendation of the consultants was regarding the need to introduce modem techniques for evaluating the performance of the employees. In this regard, the consultants recommended the introduction of the 360-degree or even 720-degree evaluation for all the employees. 

The top management next sought the views of the HR department about the lapses identified by the external HR auditors. In a detailed response, the General Manager (HR) still defended the hiring and performance evaluation practices of the company and insisted on continuing with them, citing the positive results in traditional indicators like labour turnover ratio, productivity, and satisfactory corporate performance. The HR department also maintained that the whole HR audit was an exercise in futility. Though the top management resents the views of the HR people, it does not want to antagonize them. It is taking its own time to make its final views known to one and all. 

Questions for discussions and solutions

1. How do you view the entire development at Hi-Tech Engineering Services Ltd?

Hi-Tech Engineering Services Ltd. offers a broad spectrum of engineering design and consultancy services ranging from concept to commissioning of all types of engineering projects. The company has over 3200 employees in various engineering disciplines, offers best industry compensation packages and has a good employee satisfaction ratio with low labour turnover.

The company has earmarked major recruitment expansion plans to support its business growth objectives and although Mr. Mukesh - GM (HR) assured that the entire hiring process would be completed within 3 months time period, Mr. Ganesh – GM (Marketing) thought so otherwise and insisted to the management of the company to do a thorough HR Audit of all the HR policies and practices of the company before undertaking the recruitment expansion exercise. Obviously Mr. Ganesh would have observed some lapses in the current HR practices of the company and keeping in mind the company’s business growth plans. Mr. Ganesh’s perspective was from another department’s perspective which could be right. The HR department would be oblivious to their own functioning styles and flaws. Hence this was rightly pointed out by Mr. Ganesh.

Although the HR Dept. objected to this move fearing otherwise with reasons, the top management finally decided in favour of an HR audit and hired Maxweb Consultants to carry out HR audit of the company. HR department was instructed to cooperate with the auditors and give them all the necessary information, records, documents, reports, etc…as asked by them. The HR audit report included number of recommendations to improve the ability of the company to attract the best talents.

Top management sought views of the HR department on the audit report which went into defensive mode insisting that its current practices were right  and sought on continuing with them. The HR department termed the entire audit exercise as futile which was not liked by the top management as this seemed to be going against them. The top management was in a fix as to how to get the HR department to accept the audit results and implement the recommendations for improvement without antagonizing them.

2. If you were to be the GM (HR) of Hi-Tech, how would you have acted in this situation?

If I were the GM(HR) of Hi-Tech, I would have welcomed the audit initiative. Firstly, because the company was on a major expansion road and had huge hiring plans. Hence, to ensure that it meets its expansion objectives and that there would no issues post the expansion, it needed to get it’s systems, policies, procedures, etc… updated in line with the best industry practices and also ensure that the current laid down one’s are being followed. An audit methodology would be apt for this. 

Maxweb Consultants who carried out HR Audit of the company recommended many improvement initiatives for attracting the best talents. Example: One of the recommendations was to redraft job specification statement with increased emphasis on multi-skills of the prospective applicants. This recommendation is in line with industry best practices. These days having just one skill set is not enough for the entire career tenure. One needs to demonstrate ability to handle multiple tasks over a period of time. This is a future employer’s requirement. The consultants also recommended introduction of modern performance evaluation techniques like 360-degree or 720-degree evaluations.

The audit exercise initiated by the management of the company is in an investment effort by them to improve its HR systems. Hence, it should be reacted from a developmental perspective. It is also natural that after an audit exercise is done and once the audit findings are disclosed, the auditee’s which in this case was the HR Dept. of the company and the GM (HR) start defending themselves and their actions and look for supporting evidences to perpetuate their claim. It is futile maintaining a stand that the entire audit exercise was an effort in waste and will not do any good for improving the policies, systems, procedures of the company. Rather one should move on. Have a look at the audit recommendations, from it identify the one’s which are from a strategic perspective that can impact the business and one’s from an operational, day to day running the business of an organization perspective. Categorize the audit findings as High, Medium or Low importance and plan action accordingly.

3. How should the top management proceed in the present situation?

It is good that the top management initiated a thorough HR audit of the company’s HR policies and practices before embarking on a major recruitment expansion plan. This shows that there was planning effort by the management of the company in order to get its HR systems right, rather a preventive measure to ensure that no issues recur later and that it’s recruitment expansion and business objectives are aligned and fully met.

Once the audit exercise has been completed and results of the audit findings are known to all relevant stakeholders, the top management should take the stakeholders into confidence and in consultation with them develop action plans for areas recommended for improvement. The top management should support the GM (HR) and his team in their efforts by providing them the necessary resources to execute the action plan. It should be made known that post audit, there would be no heads rolling, rather there would be support from the management side to improve. Once that fear of being faulted and removed as a result of the lapse identified by way of an audit is done away with, then everyone will willingly participate. There will be no defensive actions or behaviors. 

There could be regular review meetings to determine progress on the audit results and do course correction, if any, if observed that the action plan execution has deviated from its path. The top management should demonstrate commitment by way of its involvement and participation in the review meetings. There should be a top-down approach.

4. Is there any need for an HR audit in the company since it is not only a non-statutory requirement but also a fee-based service?

In order to become a full-fledged Business Partner, HR Departments need to not only regularly examine whether they are doing things right but also ask whether they are doing the right things. A HR audit will cover the organization's Policies, Systems, Processes, Practices and Capabilities from a strategic perspective. Thus, this HR Audit will help the HR department at Hi-Tech Engineering Services Ltd. to meet the objectives of the company that is of helping it to both identify efficiency and effectiveness issues as well as develop short-term and long-term solutions to overcome such challenges. 

Through the audit findings, an action plan can be developed to address the findings and ensure that during the next audit they do not recur again. Thus by having regular periodic audits & by taking action on the audit findings, Hi-Tech Engineering Services will be on the path to continuous systems improvement. It is also to be noted that an audit provides information not only on key measurements, strengths and areas of enhancement but also points out opportunities that a business can leverage to become an employer of choice and meet its long-range goal of attracting, recruiting, on-boarding, deploying, developing, rewarding, leading and retaining talented employees. 

Hence the need for an HR audit is fully justified at Hi-Tech even though it is fee-based. The entire audit exercise should be looked at from a fact finding perspective and to identify opportunities for improvements and not as a fault finding exercise and then to lay blame on others after the audit findings are disclosed. 

Saturday, June 6, 2015

Make employees understand logic and rationale

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine June 2015 edition.

Natco Car Limited is a popular company in the passenger car segment of the automobile industry.     It has a significant market share. It offers five popular brands of cars to its customers. The major philosophy of this company is "customer satisfaction through employee satisfaction". It strongly believes in the HR principle of "happy employees are productive employees': This company offers one of the best and most friendly environments for the employees to grow in their organizational and personal lives. 

It has many novel incentive schemes and attractive fringe benefit schemes to attract and retain the best talents. This company's incentives and fringe benefits package alone accounted for nearly 7.6 per cent of its cost of production. In fact, the excellent cordiality in labour-management relations and the high employee productivity coupled with high product quality were viewed by the company as an outcome of this generous incentive and benefits schemes.

However, recent developments in the economy and the industry in particular suddenly made the company vulnerable in the market. These developments are (i) recessionary conditions gripping the economy, (ii) the entry of low-cost budget cars in the market, and (iii) its high health-care cost due to die recent spurt in the reimbursement requests for medical and hospital expenses. Recessionary trends led to a free fall of the prices in the market and automobile goods, being a luxury item, were obviously the worst affected. Besides, the introduction of low-cost cars by the competitors compelled the company to think seriously about cost-cutting measures. To add to its woes, in the recent past, the company received an unusually high number of medical reimbursement bills as more and more employees reported major health problems. This apparently pushed up the HR cost and caused anxiety in the company about the deteriorating conditions of the general health of the employees. As a combined effect of all these developments, the company began to lose its price advantage fast and its market share began to shrink gradually. 

The top management of the company insisted on reviewing its HR cost in order to withdraw some of the benefits offered to its employees. Understandably, the fringe benefits, particularly the health-care benefits, received top priority for cost reduction after the reviews. The management was now determined to impose stiff restrictions on the reimbursement of medical bills, thereby making it virtually impossible for the employees to get ant medical benefits.

However, the HR department was ranged against such moves. It insisted on continuing with the health-care schemes, perhaps with some minor modifications. Interestingly, it came up with an alternative proposal which suggested that the employees must be educated continuously and made aware about the health problems affecting them. It also proposed periodic medical tests at the factory premises to diagnose their health problems at an early stage. This preventive approach, the HR people believed, could help the employees attend to their health problems at the right time and avoid major health crisis and the resultant huge medical bills for the organization. The HR department emphasized that any drastic measures, like the withdrawal of health benefits, could discourage the employees, thereby jeopardizing the employee retention strategies of the organization. The suggestions of the HR department were forwarded to the top management and its response was awaited. 

Questions for discussions and solutions

1) How do you assess the situation of Natco Car Limited from HR perspective?

Natco Car Limited was a market leader in the passenger car segment of the automobile industry offering five popular car brands to it's customers. The company offered a congenial growth environment for it's employees. It believed that if it's employees were happy, then it's customers would be happier as well. The HR culture of Natco Limited was people - oriented. Keeping in line with it's HR philosophy, the company designed numerous employee retention strategies like incentive schemes and fringe benefit schemes that ultimately resulted in excellent labour-management relations, high employee productivity and high product quality.

However with the passage of time, changing economic & industry scenario, Natco Car Limited began facing business challenges. They were mainly related to recession, entry of low-cost budget cars offered by competition and internal rising costs like those of medical reimbursement claim by employees. All of these made Natco Car Limited begin to lose its competitiveness and it's market share began to shrink gradually.

In view of this shrinking market position, Top management of Natco Car Limited decided to review some of the employee benefit schemes offered to it's employees, notably the health care benefits was on their topmost agenda point for cost reduction. The HR department opposed the move fearing that it may discourage the employees, demotivate them and thus jeopardize their employee retention strategies. HR department came up with an alternative solution of educating employees continuously about the health problems affecting them. HR Department also proposed preventive measures like periodic medical tests within the factory premises to diagnose employee health problems at early stage. The objective behind this was that the employees would be able to attend to their health problems at right time and avoid major health crisis later on which would also result in savings of huge medical bills for the organization.

Drastic reduction in employee benefit measures was not the right move, hence the alternative solution offered by the HR Department seemed to be a step in the right direction keeping in line with Natco Car Limited's HR philosophy. This move of education and training could offer a cost-effective method for employee development. The employees need to be valued and this can only happen when a company is committed to their engagement, satisfaction, development, and well-being like having practices tailored to meet their home life needs. The company has already an established internal partnership i.e. labor-management cooperation. This may also be jeopardised if there were any such anti-employee move. 

2) What will be the likely response of the top management to the suggestions made by the HR department?

The top management of Natco Car Limited has to take note of the fact that by dropping financial support like imposing stiff restrictions on the reimbursement of medical bills, thereby making it virtually impossible for the employees to get any medical benefits can cost the business by way of decreasing employee loyalty which can thereby lead to lower productivity and higher absenteeism. Research has indicated that one of the of contributors to employee engagement is the extent to which the company is concerned for and supports employee health, safety and well-being.

Top Management though welcoming the alternative solution proposed by the HR Department, would like to weigh the pros and cons of it before signing it off as a policy measure. It will definitely look at the cost implications if the new proposal were to be implemented and the resultant benefits (direct/indirect) arising out of it and also in terms of money saved as a result of the new policy.         

Top Management definitely would not want to be seen themselves in the eyes of their employees as someone who is not sensitive to employee's needs and only looks at how much profit business has made and how much money has been saved.  

Employees will perform better when they understand the logic and rationale behind a move. Hence the top management must tell the employees what's coming, how they will be affected, and what's expected of them. If not communicated effectively, they will be inviting the rumor mill to fill in the blank spaces by default. Communication of any cost-cutting initiative needs to be handled carefully. 

3) If you were in charge of the HR department, what would your suggestions be to solve the problems of the company?

a) Issues and concerns related to employee health and safety be used to design the work environment. Design proactive processes with health & safety factors identified by people directly involved in the work. Track its status and progress. Start having processes in place to optimize working conditions and eliminate adverse conditions. A safe, healthful work environment contributes to better process management, higher performance, and productivity, with fewer errors and rework.

b) Root causes for health & safety problems are sytematically identified and eliminated. Corrective actions are communicated (shared) widely to help prevent the problem in other parts of the company.

c) Natco Car Limited could also look at keeping this cost reduction measure as interim till such time it overcomes it's business challenges and retains it's market leadership position. This will surely help in restoring employee confidence and strengthen their engagement with the company.

d) Motivate people to be more responsible for their health.