Wednesday, December 31, 2008

You know Gates!!!

Web 2.0 is turning the world on its head.

Five years back, my mom would accuse me of wasting time on the computer. Today, it's a different story. She just cant seem to get the perfect profile picture on

"What would Merlyammai think? Who took this lousy snap?"

Networking is the new 'in' thing. Get to know your family, your colleagues or some weird filipino who claims to have been your classmate in the 1st grade.

I happened to chance upon this video on how its affects the world of employer branding and recruitment.

I guess the message is clear for the rest of us. Network. Get the word
around. Web 2.0 has just created a parallel universe. Some of us have
missed the bus. There is a lot of catching up to do.

Monday, December 08, 2008

Financial Crisis - Don't Worry, Greed will Prevail

Note: I had posted this article on only my personal Blog since this was an HR only dashboard but i feel this topic transcends all domains, hence i am posting the blog here also. All comments are welcome.

Global financial meltdown - Three words that in all likelihood conjures up the most frightening monster the world has known. This monster is taking away all the things that we cherish, directly or indirectly. First there is a pay freeze, then there is a pay cut and if that was not enough there goes our job. With that goes our 'discretionary' spending capacity, our willingness to buy things that makes our miserable lives slightly bearable, our self esteem. The factories close down, industries vanish and social unrest begins. In the midst of all this, nations along with their policy makers are left scratching their heads. Question: Our goose is cooked...right?.....Wrong!!!

I have a simple solution to this. Forget about it...Dont worry, cause this is not going to last long.

I am sane enough to believe that these so called experts who are telling you that the financial world - thus in every sense the real economy - has come to an end are lying or to put it more subtly, not telling you the whole truth. Being a layman, i will try to tell exactly why i believe that this crisis is infact going to turn around very quickly.

Let me start with simple process flow. I go to work everyday and earn a salary every month. Some part of this salary goes to buy necessary and other products, some goes into savings like Cash, equity (shares, bonds, MF's), Commodities etc, mostly to a bank. Now the place where i am working makes a product and sells it to the consumer to generate revenue and hopefully profits. Again this money is split into buying important raw materials etc, paying bonuses; dividends and saving it in a bank. The bank gets this money and pays interest to the consumer or the corporate who has deposited the money. If my company is doing well, it takes a lon from the bank and carries out expansion plans - increase manpower, get more machines, etc - and from its increased profit pays off the debt. Since the bank needs to make money too, it charges an interest higher than what it has paid for the money and this becomes the profit (after overheads). This way the cycle keeps moving.

Now for some economics. Demand and Supply. Classical theory of economics states that if the demand goes up - the supply remaining constant - prices go up too. This is true for Oil, most precious metals, etc. For other goods, if the prices are higher, then the consumer might shift to substitutes so organizations in an effort to make more profit do not increase the prices. Instead, they increase their capacity to produce goods at almost the same rate as the demand moves up. This creates new expansion plans, new jobs, and hence again the above mentioned cycle continues.

Now to make the explanation clearer lets figure some connections:
If the companies/ individuals do not earn money they have less to saveIf the banks get less money, they give out less money and hence make less moneyIf there is less money for people to spend, they either buy cheaper substitutes or not buy at allIf the consumer does not buy, the companies do not make money and expansions go for a tossIf expansions do not happen/ new companies do not come up, the industry slows downIf the industry slows down, the governments have less taxes to collect and lesser budgetsIf budgets are lesser, social spending decreasesIf social spending decreases, the unrest begins

Now the impact for the stakeholders:
Since banks are making losses/ 'not enough' profit, shareholders get angry; CEO has to goSince other organizations are making losses/ 'not enough' profit, shareholders get angry; CEO has to go. Above corollary is that shareholders are also losing money. Since countries are not making money and hence people are suffering, governments will lose their votebanksInfact due to the extreme lowering of oil prices, terrorists are also not going to have much money since their masters purse strings might just be running on emptyand hence due to all the above except one....the individual loses
Hopefully, you get my drift. This is just not going to happen. Rich individuals/ corporations/ governments can take the fallout for sometime but sooner or later they will realise that there is just no other way to come out of this but to make profits.

Also since the world today is extremely connected (take the example of terrorists - US does not buy oil due to recession and terrorists have lesser money for spreading hate) and mind you this is an extremely delicate connection, making profits is not easy unless the entire global machinery is greased. This grease comes from banking organizations and consumers who will spend the money thay they generate. And banks will spend once they are aware that if they dont, they are the ones who lose the most. They own the money and they need to pay the interest.

I can tell you this and much more in complicated jargon but it all boils down to this. Yes, for a short time (my bet is 6-12 months) things are going to be nasty. But this is just a blip. This can never be the great depression part 2 since the economies are not isolated and global linkages will play its own hand. We have probably seen the worst and things will - hopefully - seem better very very soon. It was greed that got us here and it will be Greed that will get us out of here...

Ritesh Sharan

Wednesday, November 12, 2008

HR analytics

Reproducing an interesting article (this is not mine) I found on a yahoogroup- though its actually an advertisement for an HR analytics tool, it puts forth some interesting points on using HR analytics.

Making Their Numbers by Tom Starner[Human Resource Executive Online October 2, 2008]

Some HR executives are turning to workforce analytics as a way to demonstrate their department's strategic value. For analytics to be meaningful, HR needs to understand not just the 'what,' but also the 'why,' say experts.To Lou Manzi, the use of workforce analytics boils down to a fairly simple concept:
"If you aren't keeping score, you're just practicing," says the vice president of global recruitment at GlaxoSmithKline, the global pharmaceutical giant that has its U.S. headquarters in Philadelphia.
Manzi's choice of words may not be original (it's an old saying), but, based on his experience so far, it's a very apt way to characterize how workforce analytics can work within HR. He also believes that, after years of promise, workforce analytics is finally coming of age in the HR arena.As testament to that, Manzi's staff recently moved from the practice squad to scorekeeping.
"We'd been doing some limited metrics, but we eventually realized we could not get the data quickly enough to meet today's fast-changing recruiting environment," he says.
Additionally, the data HR was producing simply didn't add enough business value, while at the same time, users were asking HR for data they should have been able to get on their own.
"We were chasing our tails," he says. "We needed to step the process up to a higher level, and drive business results."
According to a 2007 research report from Ventana Research entitled Workforce Analytics Business Intelligence: Best Practices Education, about 63 percent of respondents from benchmark research conducted by the firm have made improving workforce analytics a priority. However, only half the organizations surveyed have the skills required to do so, and 57 percent are not satisfied with their existing approaches. That's no surprise, considering that 69 percent report using spreadsheets as a way of doing workforce analytics, while only 29 percent use dashboards.
"Spreadsheets and silos of data have ruined the reputation of HR and hampered the business," says Mark Smith, CEO and executive vice president at Ventana, a benchmark research and advisory services firm in Pleasanton, Calif. "Yes, HR is finally getting it. But only in the most mature HR groups."

1. Last Bastion of Inefficiency
"We've been talking about metrics for a long time, but when you delve into it on a buyer basis, most still have relatively rudimentary analytics they rely on," says Lisa Rowan, program director for HR and talent-management services at IDC in Framingham, Mass.
Some HR leaders have a good handle on quantitative metrics -- time-to-fill a position, for example -- but lack a firm grasp of the qualitative ones, such as quality of hire, she says.
"For analytics to be meaningful, you need both," says Rowan. "It's not just about the 'what,' but also the 'why.' The 'why' is much harder to get at and requires time and patience."
Larry Hutchison, CEO of DoubleStar, a talent-management vendor based in West Chester, Pa., points to an online poll conducted by his company last spring in which 61 percent of the 400 respondents said they're assessing, selecting or implementing workforce analytics software this year, with more than 40 percent citing the need for talent-management data as "critical."Hutchison adds that he sees a difference when meeting with potential customers these days.
"Today, we're meeting with the senior HR people right away, instead of meeting with the IT folks first, which is what we traditionally did," he says. "I think HR leaders are realizing that it's been hard to get that proverbial seat at the table because they didn't have numbers to bring with them."
He also believes the interest in workforce analytics is occurring partly because more people are coming into HR from more numbers-focused areas such as finance and marketing. Then there are the HR executives who understand that driving business results should be their main objective, he adds.
"It all starts with a basic premise that HR is the last bastion of operating inefficiency out there," Hutchison says. "From a services standpoint, 65 percent of the operating costs for an organization are tied up in people, so you need to optimize your data and correlate performance back to that spend."
Ian Gordon, director of product marketing at IBM Cognos Analytic Applications in Ottawa, Canada, agrees that HR's interest in workforce analytics is on the rise.
"It's safe to say we've seen an uptick in the last six months to a year, as HR continues to try and find ways to be more strategic," Gordon says, adding that for the first time, HR is using data not just in a responsive mode -- as in, for example, when an employer loses five key employees and needs to find out what's going on."You have to manage human capital as much as you do cash, so you need some way of understanding and deploying that resource," he says.

2. Analyzing, Not Just Gathering
GlaxoSmithKline's Manzi falls within the second group Hutchison mentions -- the HR executive who needs to deliver more strategic clout by driving business results. He's certain workforce analytics can help him do it because it's already happening.GSK needed a workforce analytics vendor that understood recruiting, and whose technology is "system-agnostic," says Manzi.
"Prior to last year, we were spending much of our time gathering data, but we had the 80-20 thing backwards," he says. "We spent 80 percent of the time gathering, and 20 percent of the time analyzing. That wasn't working."
By implementing workforce analytics via a pilot project (GSK is a DoubleStar customer, using the latter's Workforce Insight On-Demand application) , Manzi says HR hopes to learn how it can become a more powerful business partner."We could no longer just gather data; we had to analyze it so we could drive what was valued by our line managers," he says. "We said, 'We'll do the heavy lifting. Here's what the data says; here's what you can do with it.' They responded very positively, so the validation is on the right track."Manzi cites a simple example of how workforce analytics has begun to drive business results. As he explains it, GSK's job-sourcing process delivered a bona fide job candidate within about 32 days, on average. Yet, by analyzing data via workforce analytics, HR discovered it was taking another 60 days to get that person hired and onboarded.
"Somewhere along the line, it was taking too long to finalize a hire," he says. "It wasn't the recruiters, it was the process."
Manzi explains that if the delay in hiring is within the sales force, for example, and every day that a sales professional isn't working costs the company $5,000 (a hypothetical number), that delay in landing the candidate is obviously very expensive.
"That situation has direct business-driver impact," he says. "If you fill the job in 20 days versus 50 days, that's $150,000 in real money."
Going a step further, Manzi says, there's no reason why workforce analytics can't dramatically reduce critical processes such as time-to-hire. In his view, if it takes four months to fill a certain job, the data can show how to anticipate that need and greatly shorten that cycle -- to the point where candidates are already lined up when certain jobs open up.
"We used to rely on gut feelings, to some extent, but now we rely on data," he says. "The tough part is that when you're ready to collect and truly analyze data, you must be prepared to see something you didn't want to see and hear something that you didn't want to hear."
Manzi says workforce analytics outcomes are improving all the time. While they may not be a strategic best practice within GSK quite yet, the results from recruiting are starting to pull in the non-believers.
"When they see it doesn't need to take 90 days to fill a job, that it can be done in 30, that shows HR is contributing to the bottom line," he says.

3. Turning Up the Heat
Pamela Wilfong, vice president of HR operations and compliance at Arthur J. Gallagher Co., the large insurance brokerage firm based in Itasca, Ill., agrees with Manzi that HR's use of analytics should drive business results. Like any fast-growing global company, Gallagher places a very high priority on driving top-line results, she says, adding that HR's focus is on helping the company do just that while reducing expenses to improve operating margins.One way to get there, says Wilfong, is to give managers ready access to strategic information and professional- development tools that will support growth throughout the organization.
"We must step up and provide [our managers] with the tools, data and analytical capabilities they need to identify trends early on and make informed decisions," she says. "This type of analysis requires robust employee data and analytical tools."
Gallagher's workforce-analytics application, from IBM Cognos, will go live during the firm's third or fourth quarter this year, she says.When it comes to the vendor selection process and other pre-implementation processes, Wilfong says, the key is to clearly define goals and requirements for the tool and related processes up front, in "painstaking" detail.
"That will give you much more confidence when you ultimately propose a solution," she says. "It's imperative to seek multiple perspectives and feedback in establishing your precise requirements before you begin looking at tools."
Wilfong adds that HR's definition of a requirement may not match those of an organization's CFO, CTO or line managers. For example, the finance department might seek to interface certain employment data with its own financial-planning systems, or marry specific employment data with cost analytics from its own applications.Once the requirements are defined, she says, the next step is to research the best-in-class tools. This includes asking a lot of questions and seeking demonstrations from the top contenders. If possible, it's especially beneficial to have a select group of employees test drive the proposed tool to see how well it responds to their specific needs, she says.
"We want our professionals to remain focused on producing new business and servicing existing customers, so our objective is to minimize the amount of time they spend navigating complex tools and processes or engaging in redundant or repetitive activities," she says. "Therefore, our top requirement is efficiency and ease of use. We also look for systems that are quick, easy to maintain and expand, and cost-effective."
She adds that the expense and time necessary for building a robust global data warehouse from scratch meant "turning up the heat" on HR itself in finding a solution that would provide more existing capabilities up front.As for determining the end-user population, Wilfong says, giving everyone access to a reporting tool without educating them as to what they are using or what the data means is worse than not sharing information at all.
"There is too much potential for a casual user to use the wrong data or draw incorrect conclusions," she says.
Wilfong predicts that corporate and field HR staff; other corporate departments, such as finance; and line and executive managers will use the application once it's fully implemented. Gallagher HR also intends to provide managers or other more casual users with several established reports incorporating meaningful analytics, dashboards and core data that they can access and refresh easily, as needed.

"We will be providing some of those reports up front and will expand that suite or capabilities as needs change," she says, adding that for more extensive or ad-hoc reporting requests or analysis needs, HR will designate a smaller team of subject-matter experts within the function to help satisfy those requests with accuracy and speed.

4. "A-ha" Moments
When it comes to the data itself, Wilfong outlines what she believes to be the most effective steps HR can go through to provide data that actually matters to other executives and line managers.First, she says, it's critical to define needs up front by aligning your objectives with the company's business goals, a fairly standard approach for most HR technology implementations. Next, it's a good idea to seek multiple cross-functional perspectives as to what defines success or constitutes a "red flag" in a particular area. Then, discuss the formulas or data elements you might use to define success or identify problems, and any rationale as to why specific data elements are more relevant than others. Finally, provide reports that are driven by those data elements.
"This may sound a little simplistic, but the process and reports need to be simple to be successful and repeatable," she says.
IBM Cognos' Gordon says the most common experience he's seen for new customers is that workforce analytics provide them with insight they couldn't get before. For example, with IBM Cognos 8 Workforce Performance, an average HR person could -- in just minutes -- investigate the demographic workforce distribution (to understand the age of the workforce at a company, location and department level) without involving IT or requiring an analyst to use a bunch of text-based reports from the HRMS and then build a model in Excel using the data from the reports -- not once but three times.After that, if they wanted to see how they have been doing at recruiting into the company, by age range, and again, by department or location, the information is available quickly without requiring an analyst and IT to spend a whole bunch of time working in Excel.

Finally, they can present the information in easy-to-read, simple reports.
"The biggest 'a-ha' moment for customers is when they see the breadth of data they can get right out of the box," he says. "They say, 'I can now know what's going on in the way I want to see it.'"
DoubleStar's Hutchison says the major objective with the company's workforce analytics applications also was to make it simpler and highly configurable.
"Our application offers 17 dashboards from eight to 12 different views," he says. "When you add it up, there are 150 metrics we've defined, and within that, the customer can drag and drop, access a number of views, etc."
GSK's Manzi is confident that workforce analytics will get increasing traction now that vendors are delivering easy-to-use, robust applications.
"When the CEO says to me, 'What's the No. 1 challenge in recruitment?' I now have the data to back up what I say," Manzi says. "With these tools, you can actually get to the performance data that can directly lead to how you can chagne behaviour in positive ways

Sunday, November 02, 2008

Feed Forward

Gitansh Malik
Saket Sanganeria

Feedback is one of the most effective tools for managers. The importance of feedback in the personal and professional development of an individual is widely known and accepted. In strict business sense all managers desire a status check and wish to know how well they are doing. Even in non-business situations there is an inherent desire to learn about which actions went right and those that went wrong. For long, successful leaders and top managers have relied on giving and taking feedback to improve work performance and enable personal growth.

The feedback process has also some inherent limitations. Firstly, feedback is primarily dependent on the performance in the past. This is not very motivating in case the taker has not performed well before. Feedback is also not particularly valid if there is any change in work situation or job specifications. Second limitation of feedback is that only selected few can contribute. People who are directly involved in the job or have work interdependency can only offer feedback to the taker. Thirdly, feedback is majorly influenced by recency effect. This makes the entire mechanism incomplete and less effective.

In today’s world, certain organizational practices further aggravate the disadvantages of feedback. In most organizations feedback flows down the ladder, from top management to lower levels. This unidirectional flow of feedback is a major roadblock. Another disadvantage is that feedback primarily focuses on weaknesses of the individual. It is used to find what went wrong and how it could be corrected. This could get judgmental and spoil the senior-junior work relationship.

Rater’s inexperience also makes feedback less effective. The process aims at the development of the person through the views of others. If the person giving the feedback is not competent enough, the utility of the whole process becomes questionable. It’s also not just a matter of expertise, knowledge or competence, but feedback is greatly affected by the importance and effort given to the process by both the sides. The boss may be busy with other commitments and would not have properly evaluated the performance of the individual.
A good feedback can improve results and strengthen working relationships. Above all, good feedback can lead to personal growth of the manager. However, even after the advent of 360-degree feedback and other mechanisms, not many managers are open in giving and taking feedback. The underlying problem is that even though a manager may desperate to get feedback from his team, he is not ready to face any criticism.
Manager: “What did I do wrong?”
Boss: “You were wrong in these aspects…..”
Till today, feedback is mostly aimed to know what was done wrong. There is a negative connotation attached to it. A manager who has done very well in the past may not take poor feedback very well. The situation is further grave for some senior leaders who would refuse to accept blind spots in their behaviour. The manager who gives feedback is equally troubled to depict the clear picture. He could be put off giving feedback because it makes him uncomfortable, or that he wants to avoid confrontation.

The way ahead – Feedforward
The ultimate objective of feedback is to achieve a desired change or to reinforce a particular behaviour. The main concentration is on achieving the required behaviour, skill and actions to reach an objective. Since, business is all about achieving the objective in the best possible manner, Feedforward is the way ahead. Not only there is a need to concentrate on correcting past actions, but to also try and shape up the future course of manager’s actions. And Feedforward does exactly that. Feedforward tries to get the correct results in the very first attempt. Feedforward utilises the experience, expertise and knowledge of others to help the taker do things right in his first time.

Meaning: Feedforward means to take suggestions for the future that might help the person achieve positive change in their selected behaviour. Feedforward helps people envision and focus on a positive future, not a failed past.

Marshall Goldsmith, one of the world's top executive coaches and the author of 18 books on leadership, is the pioneer to introduce the concept of Feedforward. After much research and experience Marshall feels that Feedforward is an effective tool and its suggestions can “help someone as much as they can”.
Manager: “Which is the best way to do it”?
Boss: “The best way to do this would be to…..”.
Why Feedforward is better
  • Bi-directional – Feedforward can move down the ladder in an organisation and vice versa. This is useful for managers to seek suggestions from their subordinates, who otherwise fear negative feedback.
  • Focus on positives not negatives – Feedforward suggestions are aimed to know the best way to do a job. It focuses on what is the right and not wrong. This makes it unique and better than feedback.
  •  Future oriented – Feedforward focuses on what lies in future. It does not consider what has happened in the past. This is particularly motivating for a manager who does not enjoy any good performance in the past.
  • Non-Judgemental – Feedforward does not get personal. It is common for all takers. The rater can also give suggestions without any personal bias against the taker.
  • Everyone can contribute – Unlike feedback which can be provided only by small number of people, Feedforward can come from anyone who is experienced with the job. This also helps to strengthens work relationship in the organisation.
  • More enjoyable – Taking and giving Feedforward suggestions is less stressful than feedback. The rater does not have to bother about how the other person is feeling about his suggestions. Since it deals with only positive elements, it is more fun.
Feedforward is consciously or sub-consciously used is many non-business situations. In sports, the coach makes the team focus on ‘the final goal’ and not the strengths and weaknesses of the side. Many popular coaches make their team envision perfect finish to a match. These coaches use Feedforward to keep the players motivated and make them play well. Feedforward can also be seen in parenting. Most parents, in the formative years of their child, spend time telling ‘what a good boy should be doing’. They create a vision of a well mannered child in their child’s mind and persuade him to be like that.
Makes you a better leader
Leadership is quite different from the day to day job of all the employees in an organization. There are several operational and behavioural issues attached to the responsibility and authority that is unique to top level management personnel. Leaders are highly successful people. Success brings with it a common resistance towards negative judgement. Any inconsistency with the way a person sees himself gives rise to aversion. Accepting and utilising negative feedback needs a deep understanding of oneself, a great zeal for personal development and acceptance of one’s own limitations. While there is no dearth of the first two but the difficulty arises when success collides with the limitations of a person. Feedforward suits these situations; it provides ideas for future development and goal achievement with general acceptance.

It is fair to assume that a manager is responsible for getting work out of his subordinates. This requires every manager to inspire and motivate and develop his subordinates. It’s the manager who takes up the responsibility of achieving the goals. In this pursuit he needs the contribution of everyone working with him and Feedforward can serve as a very effective tool here.

As mentioned before, Feedforward concentrates on positive future, and not a failed past. This idea of better future in the very first instance can help reduce many mistakes. It opens new gates and provides a positive direction. Any discussion about what is right is far more motivating than what is wrong.

Feedforward is not a personal critique. It is performance driven and does not depend on the person. On the other hand, feedback is more often than not considered a personal attack. It leaves the taker in a state of discomfort. Although, constructive feedback is not to be taken personally, but often it is. Feedforward is void of such disadvantage.

Feedforward covers all aspects of feedback. If feedback makes an attempt to forego something wrong, Feedforward does it as well. And Feedforward does it without humiliating or embarrassing the individual. Feedforward is also much faster than feedback. Since it focuses on solutions, one does not need to first find the problem and then its solution. This also makes it more efficient. So, logically Feedforward should replace feedback in few years time.
Giving and taking Feedforward can be also made a group exercise. This makes it fun and thus participants learn more. There is no need to divert attention to answer specific questions but focus entirely on gathering maximum suggestions.
Marshall Goldsmith in his book ‘What got you here, won’t get you there’ has entailed how senior leaders are reluctant to change their behaviour. He concludes that more successful people are aware that the qualities which brought them to this level will not necessarily be helpful to climb the next level. He stresses that for senior leaders to improve their behaviour, use of Feedforward is very effective.

Feedforward should not be looked as a substitute of feedback. We do not intend to say that feedback should be abandoned. It has helped managers in the past and would continue to do so. We would contend that in some business scenario feedforward can be more effective than other traditional.

Feedforward involves mentorship, guidance, suggestions and sharing personal experience and knowledge. Receiving positive suggestions and useful insights is taken positively by majority of the people. However, as in feedback the competence of the person giving suggestions is the most critical factor in generating the desired output. The organization needs to ensure that only the most sought after and experienced person provides Feedforward to others. Also, the person giving suggestions should enjoy high credibility in the organisation. In the absence of credibility and trust, the taker may never actually implement any suggestions.

Feedforward is an emerging tool and much study and research is still required. But it is safe to conclude that promoting Feedforward culture in the organisation would inculcate an atmosphere of coordination, interdependence, team work and would thus generate and environment of trust and continuous improvement in the organisation.

Wednesday, October 15, 2008

How Much Did You Say Your Rent Was???

During one of my assignments involving compensation structuring, I was intrigued by this one question, How does one fix the Employee’s Basic Salary?

One could take an ideological (or rather Historical!!!) standpoint on the matter. Basic pay is a measure of how much the person’s skills are worth in the market. But then again, this is an idea which has outlived it’s time for reasons beyond my understanding. In the current market scenario, where employees decide to switch careers based on a few thousand rupees, Basic Pay will not count for much. Frankly, how many of us find ourselves taking pride at how high our Basic Pay is?
I will take a shot at explaining the process of structuring pay in an organisation. I will assume that there is adequate knowledge of existing compensation levels. So you know how much Mr Ganesh is being paid. You also know how (the compensation structure!) he is being paid?

If the company is in the process of carrying out a compensation review, it would be ideal to decide the strategic market positioning initially. This would give you a fair idea of how much Mr. Ganesh is to be paid.

Tax Saving Components

The Indian government has given the C&B Manager a slew of compensation components to choose from with regards to compensation structure. More popular among these being Telephone Expenses, Medicals, Conveyance, LTA, etc
The first step would be add to the potpourri all components for maximum tax saving. Most of them would have an upper limit, which is exempt from tax. More than this and the employer/employee would be liable to pay tax, IT or FBT.

Basic Pay
There are certain components which are calculated as a percentage of the Basic Pay, as per existing legal statutes. These would include the House Rent Allowance, Provident Fund and Gratuity. The next step thus, would be to fix the Basic Pay.

Now things get interesting. Say we fix the basic at about 40% of Cash to Company. Atleast everyone in the industry seems to. Time to take a different path.

Why can’t the basic be lower?
Lesser the Basic, Lesser the HRA. Lesser the HRA, Lesser the tax savings. Again, this being contingent on the actual rent being paid by the employee. For the purpose of this discussion, we will assume that the employee utilizes his full HRA.

Why can’t the basic be as high as possible then?
More the Basic, More the Retirals. More savings, but also a smaller pay cheque. It is possible for an employee to increase the statutory 12% contribution to the Provident Fund. In which case he would greatly reduce the taxable salary and increase his savings. It must be highlighted here, that the basic impacts both tax and savings. But the savings would take the spotlight, for the simple fact that the employee has freedom to increase his contribution to PF. Now if I were a newbie into the industry, I really would like a fat pay cheque at the end of the month. I would not be thinking about retirement now.

Provident Fund
The employee exercises a lot of freedom regarding his PF contribution. He is allowed by law to apportion a larger percentage of his CTC to PF, though the company is not bound to match the employee’s contribution. Hence, an HR consultant has another reason to lower the Basic.

An employee is eligible for gratuity only on completion of 5 years in his company. Again considering the amount of employee turnover witnessed by companies these days. This component becomes almost ineffectual.

Special Allowance
So now, we have two balancing forces. In comes a third player, Special Allowance. Special Allowance is usually the balancing figure in the CTC. It plays the role of rounding out the final CTC. Apart from Basic, Special Allowance is the only taxable amount. The consultant then faces the dilemma of structuring compensation based on future savings for the employee. In which case, he would increase the Basic.

Coming back to the Rent
Now we have more arguments in favour of lowering the Basic. The only factor coming in the way of relegating the Basic to a measly 2% of CTC would be the HRA. The Basic should be high enough to just accommodate the Rent the employee pays.

There are grades in the organisation which witness a higher turnover. The gratuity would not make a difference for these employees. If the organisation has the HR Payroll processing department to carry out the operation, it is imperative that they enquire about each employee’s house rent!!! This would enable them to fix the basic and hence the entire compensation structure.

If we are looking at employees going for the long haul, the gratuity would make a huge difference. But then again, 5 years in the current job market is a lifetime!

Dummies' guide to setting your goals

' .. and one last thing. Tomorrow is the deadline for submitting your goals. Just write up 5-6 goals and send them to me. I know I totally forgot about it........'

Let's face it. A lot of us have mentors or bosses who think that we can churn up our individual yearly goals like bullet ridden chevrons on a Powerpoint template. It definitely isn't that easy. Or is it?

The foundation of any performance management system is a well written goal. Without that, there's nothing you are working to achieve and thus nothing to measure your performance with. Giving a set of poorly defined goals is definitely not about cheating the system. It could in fact, be cheating you of that long-deserved promotion.

So, what should go into your goals- here's a quick guide. First, consider the different aspects that your company gives importance to. They could be among Client Service, Industry knowledge, Service Area expertise, Developing the practice, Developing the firm and Developing yourself. Some firms do give a lot of importance on learning while some others take into account your participation in firm initiatives and CSR work. Once you have this list, mark off the few you would like to focus on. While this largely depends on the company you work for, make sure you have a decent coverage of the different elements.

Now you apply the age old formula - SMART. Remember to add in information on how you would be able to measure you against your goal. For those of you who have no clue or need a quick refresher:

S- Specific- Always make sure your goal is specific and to the point. Mention the exact area of development, how you would work towards it and how it is going to be useful. Example: I will help in building the organisation by participating in recruitment activities to ensure the best talent is attracted and recruited. I will participate in at least 3 recruiting initiatives in the next one year.

M- Measurable- Like I mentioned earlier, quantify your goal in some form. Make sure that it is easy to measure your work and performance. Wherever it makes sense, add a number - number of online courses, clients, activites, deliverables, anything.

A- Attainable- Let's play a little safe. Don't go about promising the earth, the moon and the 800 billion stars. Ensure your goal is attainable, if you can stretch a little. Be practical and see that they are not entirely out of each.

R- Realistic - Honestly, can we do this? Is it too less? Is it too much? Do we have the commitment to get through it? Your goals have to be realistic and reasonable. If you make people laugh at your goals, you should have the confidence and responsibility to achieve them and have the last laugh.

T- Time bound- All goals need to have a timeline to it. While most goal setting processes occur yearly, feel free to have time lines for a part of or the entire goal. If you think you can sell 5 of those X-ray machines in 1 month, go ahead and put it in there.

Lastly, make sure that your goals are your own. Add in a personal dream like taking a class in Diversity or interviewing at your alma mater and experience the joy as you work towards it.

Monday, October 06, 2008

Why not Paid Holidays instead of Closed Holidays?

In India, we have a system of closed holidays. Typically 12 days in a year. Out of these 3 are Government Holidays, viz. Republic Day, Independence Day and Gandhi Jayanti. If as an employer you require your employees to report to work during a national holiday, you need to seek advance permission from the Labour commissioner. Now, leaving these 3, and Labour day the other 8 are religious holidays. Religious holidays of those religion which most of the workforce follow.

All of the above are also paid holidays. The employee draws a salary even though the office is closed. But typically, for a lot of these holidays, the purpose of the holiday is lost. "Kal chutti hai". "Kis baat ki pata nahin per kal chutti hai". This is the typical workforce response. Now, instead of giving a holiday for Navroz, when the majority of your workforce is non-parsee, or not giving a holiday for Id, when there are substantial number of employees who are muslims, really doesn't make sense.

At the same time not everyone celebrates Ganesh Utsav or Durga Puja. A better proposition would be to give 8 days of paid leave per employee per year. The employee can choose when to avail that. Also, the paid leave policy could be made transferable. So, if I see that I am not going to use my paid holidays for this year, I should be allowed to transfer it to a colleague who needs that holiday. Maybe for medical or personal reason. This would also go a long way in enhancing employee morale.

There are of course some shortcomings for this idea:
  1. If your work depends on the work of others, this system may not work. If the critical operator is on leave, it doesn't make sense for the rest to be at work and not do anything productive. But at the same time, this ensures that the system becomes process dependent and doesn't remain person dependent
  2. For working mothers, this may not be a very great option. Schools will not and can not have the concept of paid holidays. So, schools will choose those 8 days to close. Working mothers will have to make arrangement for baby-sitting on those days
  3. If certain religious holidays (like Holi) lead to large scale disruption of normal city life, then this concept would not work. Most people would choose to stay away from work rather than venture out and risk getting assaulted by revelers
But the advantages of this, other than the ones already mentioned would be:
  1. This takes care of every religious denomination and also the atheists. No one feels excluded as every employee can choose which festivals to celebrate and which not to. This will serve as a morale booster
  2. Typically it has been observed that when the festivals are on a Thursday or Tuesday, there is a marked decrease in attendance on Friday and Monday. This will help in curbing that trend
  3. A longer vacation period for employees
Well, the merits and demerits are open to debate. Nor would this system suit all workplaces. But at the same time, this idea needs to be thoroughly examined before either implementing or rejecting it.

Its high time Performance appraisal systems became more transparent...Some simple guidelines!

Something which will always lead to trouble in a performance appraisal system is if any one of the participant in the appraisal process is not honest. The appraisal system should be such that it is not unfair to the employee and should not be a weapon in the hands of the appraiser such that it is only based on his whims and fancies. A better approach should be to involve a larger number of people in the process or to take into account a larger time frame when conducting appraisals so that it becomes impartial. Some of the things that can be done here are:

1. 180, 270 or 360 degree appraisal programs so that the appraisal is not in the hands of a single person.
2. The organization looks at the performance of the employee over the last 3 years preceding the appraisal and if the employee has not been in the organization for so long then the total time frame is taken into account.
3. If an employee is not satisfied with the appraisal given then there should be grievance resolution mechanisms to sort out the concerns.
4. The appraiser can be asked to list out specific details of performance appraisal with examples relating to why such a rating was given.

Only when such steps are implemented to safeguard employees against the vindictive agenda of the superiors will the performance appraisal become a meaningful tool in the hands of the employer to ensure productivity and commitment from the employees.

Ritesh Sharan

What drives businesses to adopt Corporate Social Responsibility? And does it really matter what the secret agenda is?

Let’s first have a look at what the various definitions of CSR are in the context in which we are talking about it. These are the two definitions I would refer to in this article:

Corporate social responsibility (CSR)[1] is an expression used to describe what some see as a company’s obligation to be sensitive to the needs of all of the stakeholders in its business operations. A company’s stakeholders are all those who are influenced by, or can influence, a company’s decisions and actions. These can include employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighborhoods, investors, and shareholders

CSR[2] is concerned with treating the stakeholders of the firm ethically or in a responsible manner acceptable in civilized societies. Social includes economic responsibility. Stakeholders exist both within a firm and outside. The natural environment is a stakeholder. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation.

What is the first thing that strikes us here? In both these definitions we are looking at stakeholders. Not any particular (Specific) stakeholder. Both these and numerous other definitions focus on the entire gamut of stakeholders in the environment. Now the important question here is how does a company decide which stakeholder has to be given the maximum value. Or is it that all stakeholders will be given equal importance. Furthermore, if only some stakeholders are being given critical importance then what happens to the CSR philosophy. Does it become defunct for the organization or it still exists in a supposedly grotesque way. We will have a look at some answers as we go along.

Some firms believe in CSR. And they have been doing so even before the terms were coined. When we look at what the Tata’s have done in the city of Jamshedpur we can very well appreciate the fact that for some firms this entire discussion about CSR is utterly useless. They just do know what ignoring this concept means. It is in their blood and they really do not know how to work without this. Hats off to them first.

Then there are some Companies that are making profits and also contribute to some, although obviously not all, aspects of social development. They believe that surely every company should not be expected to be involved in every aspect of social development. That would be unproductive, not to mention a drain due to the costs. They believe that a firm needs to be involved in some aspects of these activities. What it provides the firm is visibility, it will make its products and services more attractive to consumers as a whole, therefore making the company more profitable. There will be increased costs to implement CSR, but the benefits are likely to far outweigh the costs.

Then there are the third types of companies which i am not really bothered about - the ones who do not understand this concept nor do they want to!! Realization will dawn one day, probably sooner than most of us realise - the day when the consumers ask a simple question Why?. Let’s wish them the best of luck and continue.

We are interested in the second category of companies and to a lesser extent the first ones because they are into CSR and we want to know what makes them do what they are doing.

Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's principal purpose is to maximize returns to its shareholders, while obeying the laws of the countries within which it works. Others argue that the only reason corporations put in place social projects is utilitarian; that they see a commercial benefit in raising their reputation with the public or with government. The key challenge here is the rule of corporate law[1] that says that the organization should not do anything that decreases its profits. Because of this, it has become clear that a CSR activity generally can only be effective at achieving social or environmental outcomes if it succeeds in raking in profits. This requires that the resources applied to CSR activities must have a higher return than those resources could obtain if applied anywhere else. Though a strong logic, this means that the possible scope of CSR is drastically narrowed.

Also, this means that the stakeholders mentioned earlier are nothing but the primarily shareholders , the employees and to a certain extent the market and the rest have to deal with the remaining few scraps. But is this a problem? Let's be Honest - Definitely not. When we look at the various advantages accrued by the initiatives to the organization and to the stakeholders we see that it is definitely a win-win situation, even if the firm gains more than the others. When we take the example of ITC e-Choupal and look at the advantages it has given to the Indian farmers, we can really overlook the issue that in essence ITC is only trying to gain the suppliers market and strengthen its own distribution network for getting raw materials smoothly. Proponents of pure CSR might argue that the purpose behind the initiative should be development and not profit. But I would argue that it is better that the companies are doing something and getting returns in exchange while making a important contribution, than just keeping to their own and just sticking to the laws of the land while doing business.

They are the ones with the best of talent at their disposal which can be used effectively for such purposes and if they are making profits in a socially responsible manner they should be lauded and examples made of them. Let’s be happy that at least there is something that is making these firms do the work they are doing here.

Finally, lets face it - The Tata group of companies are a dream but the rest of the organizations are also not exactly nightmares. Let’s at least support them in their endeavours.

Ritesh Sharan




The hidden Costs of Business


Dhruv Sonthalia

Saket Sanganeria

Presenteeism is opposite of absenteeism, both are a headache for the industries. Absenteeism it refers to the absence from duty or obligation. The obvious reason for absenteeism seems illness or sickness but an employee may be absent due to many reasons. Some other reasons for regular absence are emotional problems, family problems, etc. Absenteeism cost mainly consists of payment paid in the form of wages to absent employees, additional overtime and temporary staff covers. It is estimated that the cost of absenteeism was around 12 billion pounds for United Kingdom for the year 2002. It is considered to be a major concern not only because of the actual absence of the employees, but also because the absence is without sufficient notice or justified using fake reasons.

However recently there has been a marked shift in discussion from absenteeism to presenteeism. Presenteeism is the complement of absenteeism. It refers to the problem off employees showing up for work but not being able to be fully productive because of ill-health or other problems. It is a concept close to employee engagement. Some researchers believe that the cost of presenteeism could be around 7-9 times more than that of absenteeism. Many Indian companies have also started to take note of this and are developing policies to solve it. Some believe that increasing number of days of sick leaves, better health insurance coverage and better work environment can help reduce this cost. But these are just some solutions which may or may not have the desirable effect on the cost of presenteeism.

A better understanding of the problem helps

Presenteeism exists in various forms. These forms have their specific modalities and reasons. Each of these problems give rise to a clear distinct situation. To help us appreciate the real face of the problem we need to look at it various forms in details

Working with illness

Working with illness or any other factor which hinder the performance of an employee is presenteeism. The fear of loss of income or employment on the part of the employee is a major cause of presenteeism. Many workers and employees come to work when they are ill – they work with headache, mental pressure, anxiety, and other undesirable conditions that impair their performance. The below par performance adds to cost for the employer and adds to the peril of employee. The effect may not be very serious for a person working manually on repetitive jobs. However, with the growth in contribution by the knowledge workforce the impact is much higher. Mental performance is the key to productivity and output here. Given the nature and requirement of the work, if the employee’s mind is not on the job or if he is unable to contribute his hundred percent he (she) becomes a liability to his (her) organization.

Erratic working hours and instability in work life balance

Erratic working hours give rise to presenteeism. Presently there has been a growing trend among white collar employees to devote extra hours to their work. Employees work in a culture where coming in early, working till late and battling illness is expected and required. This is done to enhance career prospects and sometimes demanded by the work culture in the organization. In many cases it has been found that the employer makes it clear to employees that working till late and reporting early is expected of them, as normal job requirement. Presenteeism disrupts the work life-balance and is like taxing the employee off his normal life. Both employer and employee are confusing between hard-work and over-work.

The rise of corporate work culture and specialisation in each field in India the problem of presenteeism is expected to engulf a large portion of the Indian economy. The transition phase is bound to demand its casualty. The employees moving towards the more organised fields are prone to presenteeism as they are ambitious and not shy to over-work. On the other hand, the managers and employers do not realise that this over work would come at a cost much higher that the revenue being generated from it. In an economy where unemployment is prevalent the employees don’t have much choice but to play by the rules formulated by the employers.

Employee disengagement and lack of motivation

Presenteeism can be viewed as a problem of employee disengagement. The productivity of the employee is low because they are not involved in the work they are doing and thinking about something else like a cricket match, a party or some personal problem. Some researchers also believe that other factors such as loss of productivity due to excess travelling (in cities like Mumbai and Bangalore) also contributes to presenteeism. However this is a controversial issue in the HR world.

Absenteeism vs. Presenteeism

Presenteeism seems to be an absolute opposite of Absenteeism. Absenteeism leads to a direct and apparent increase in cost for the business but presenteeism is no lesser evil. It may be argued upon that due to absenteeism 100% of the worker’s productivity is lost each day as the worker is not on the job and thus the cost of absenteeism is more that presenteeism, but this is not true at all time. The cost here is hidden in the sense that sometimes the cost of low quality work is higher than no work. Working under illness, anxiety or without interest prolongs recovery. Proper rest and care are very important for fast and complete recovery and rejuvenation. Due to presenteeism, employees are devoid off the time and required rest. The ultimate suffering of the employees trickles down as huge cost to the enterprise.

Many companies have been formulating policies to tackle presenteeism. Some Indian companies have used traditional approaches like improving work life balance. However their initiatives are restricted to a few policies or programs which do not last more than six months. Recently things have started changing. Quite a few organizations are now enforcing policies which lay great emphasis on the health of its employees. Employees are also discouraged to come for work when they are sick. Other practices such as encouraging sick employees to work from home are also adopted.

Moving towards a solution

The root cause

The impact of presenteeism has plagued the work culture in public sector and government run organisations. Employees attend work for the sake of attendance and are least interested in the job at hand. The effect is felt on the overall performance of the enterprise. It was believed that the root cause was improper organizational structure and work culture being promoted in these organisations but now the experts accept that as the main focus is to control absenteeism, the problem of presenteeism has aggravated.

Importance of working environment

The trick in tackling employee presenteeism is to ensure a good working environment with employee friendly strategies in place, without encouraging useless absence from work and faking illness. Many employees at Google believe that it is the flexibility and financial security offered by the company keep the employees going as they can do their best without worrying about too many things. Thus promoting a work environment which encourages creativity and flexibility helps Google tackle the problem of presenteeism. This is an example which could be followed by other company.

Importance of work culture

Managing moral is also extremely critical for an organization. A firm which has a culture of promoting intense competition and politics would have a much greater cost of presenteeism than an organization which promotes working in teams. Thus the cost of presenteeism is to some extent dependent on the culture. Managers have to improve the work environment in order to solve the problem of decrease in productivity.

Path for managers

Indian economy needs to prevent presenteeism from stepping into the normal work culture of the economy. It is very easy to stop a disease from spreading than to eradicate it later. Once the total work culture starts indentifying it as a general necessity to step up in life and to meet the requirements of their work, it would be very difficult to break the shackles.

Change in approach

Presenteeism is largely based on the choice of the employer and employee regarding their work schedule. The first measure to solve the problem is the spread of awareness among the employer and employees the fact that presenteeism is indeed a cost that they cannot afford to bear. Once the enterprises start recognising the cost, steps would be taken to reduce it.

External pressure

A complete change in the work culture is not possible just through a spread of information. Government needs to give relaxation to employees in the form of extended leave during illness and regulation of erratic working hours. The same cannot be used for white collar employees. These employees need to understand that although there job structure is such that they do not have much power in their hands but they should demand professionalism from their employers regarding the fixation of office timings and the overall job structure.

Internal process backbone

The biggest implication of presenteeism for an HR manager is to ensure that data on absenteeism is collected and analysed in the correct way. The results should be strategically used. Managers should discourage ill employees from coming to work. A few organizations use flexi hours or give the option of working from home. These strategies have done wonders and reduced the cost of presenteeism.

The performance appraisals of managers should not only be based on the specific business performance but criterions such as absenteeism rate should be included to track absenteeism as well as presenteeism. This would seem strange as it would ideally increase presenteeism. However the managers would be required to keep a track of the health of the employees and this would be one of the criterions on which their performance will be evaluated.

Change in company policy to implement the change

Sick leaves have a huge impact on absenteeism as well as presenteeism. The high cost of presenteeism is primarily due to less number of days for which an employee can avail sick leave forcing him to come to work even if he is unwell. Thus companies can increase the number of days of sick leave. However this could lead to an increase in absenteeism. A solution to this problem could be having such a culture in place where an employees’ absence is not penalised. At the same time the office should be made an interesting place to work which would make him or her come to the office. A number of companies have increased their number of days for sick leave. Even governments are responding to presenteeism. Recently the state of San Francisco passed a regulation requiring organizations to give sick leaves and paid leaves.

Monday, September 22, 2008

Building a case for Diversity & Inclusion

Diversity is talk of the town. Visit website of any of the MNCs and it would read "We want to attract, develop and retain diverse talent. We value differences of gender, race, age, ethnicity, sexual orientation, thinking styles...etc etc etc". The subject has gained a lot of momentum over past few years though Diversity is not a new concept for corporates. IBM started its journey on this path more than 100 years back when it hired its first black and women employees in 1899 and first employee with disability in 1914.

If Diversity is important, creating an inclusive environment to embrace and leverage diversity is critical for business success. Inclusion is a very personal sense of belonging. Inclusion refers to an environment where everyone in the organization gets an opportunity to contribute to the business success and is valued for the distinctive skills, experiences and perspectives he/she brings to the workplace. Diversity & Inclusion has become the way of doing business for IBM and many more companies now and is interwoven in their long term vision and strategy.

There are different reasons why Diversity & Inclusion is now being seen as a critical business issue.

Ethical: It is the right thing to do
- CSR and its linkage with Diversity & Inclusion
- Company values and culture
- Corporate image in society
Regulatory: Complying with law of the land/International laws
- Demographic changes
- Reputation, employer of choice
- Innovation - New products, services and markets

Diversity & Inclusion is one of the major engagement factors for employees. Talent is found in all population groups and is becoming a make or break corporate competency. Demographics of world are changing, customer profiles are changing, talent pools are changing and hence it is imperative in order to be successful, a global company mirrors the outside world in its employees as well as customers. Diverse employee base helps in understanding and addressing the divers customer group needs. There is plenty of research to support the hypothesis that Diversity drives innovation. Diverse teams take more time to settle in and perform compared to monolithic teams but the results produced by them are far more superior. Ofcourse, the role of leadership in managing diverse teams and leveraging the diversity cannot be over emphasized. How to develop inclusive leadership is another big topic in itself which merits detailed discussion.

Diversity & Inclusion is not about recruiting more women or disabled people or having a crèche facility or flexible working hours for working parents. It is about a process of culture and mindset change where everyone acknowledges and understands that diverse groups (be it employees or customers) have different needs and about respecting and fulfilling that need. As any culture change process, it also flows top down and hence top leadership commitment is vital for it to succeed. Diversity & Inclusion has to be approached as a culture change management process with

- Defining a clear Business case
- Building leadership commitment
- Establishing an infrastructure to support implementation (resourcing)
- Communication with stakeholders
- Building it into existing processes like Performance objectives and rewards to create ownership and accountability

However, there is a paradox with this concept. If Diversity is about valuing and leveraging differences, what happens to the concept of a strong organizational culture? What happens to shared values, common leadership behaviors, a prototype IBM/Unilever/XYZ employee? Where to strike the balance between commonality and diversity both in their own ways leading to high engagement and sense of belonging and hence high productivity? Comments are welcome :)