Aspirations and Realism: Balancing Business Perspective

As everyone has aligned themselves to the realities of downturn and slowdown, as the case might be for different companies, we are setting into some very interesting business times. We have lived in times of crazy growth for a long time. Last three decades or so have been either times of slow stable growth (pre 1991) or high growth (post 2000)…..seldom have we been in times of downfall from existing positions. To that effect none of us have ever gone through such business conditions in our working lifetime in all probabilities. These times will probably teach us some of the most hard hitting and valuable business lessons.

 Some of the lessons many corporate honchos have already started to realize are:

Lesson 1 : Best business plans are those which are made on real business and real market…..anything that’s based on too many complex set of assumptions made in order to reflect geometrical growth, are bound to be high risk prone

Lesson 2 : Best form of profitability is real cash flows….virtual profit booking in ever inflating books  might cause  for some exciting exit options to investors in good times, however in more difficult times they will struggle to even maintain regular expenses

Lesson 3 : Its good to have internal accruals and then growth…not vice versa

Lesson 4 : Ability to get high amount of debts and have a high debt equity model might make the business model look attractive to some….however heavy debt is what it is on balance sheet…debt that needs to be serviced

Lesson 5 : Steady growth is not bad and periods of consolidation after every round of growth is very good….often we don’t give the business an opportunity to go through consolidation phase in fear of loosing growth advantage

 While some of the above lessons are bringing about great sense of realism about ways of managing business, to me what’s interestingly standing out is importance of “strategy” in such times….rather paradoxically though. It’s important to understand that market is what we make of it. If ever strategy was going to create huge differentiation for organizations, its periods like now. These are times to learn from conditions and not succumb to them. Far too many organizations have resigned to the fate of economic conditions today….there is difference in picking up the learning’s and moving forward, as against getting risk averse due to mistakes made in the past.

 Closer home, in the last quarter or so I have seen consulting firms in India which are down by 30-40%, as against firms which are up by 20-25%. That’s a huge differentiation getting created. Same very firms in the last year were growing at same pace when market forces created natural growth.

 Organizations which can imbibe realism in ways of running and managing business, but not loose sight of creating aspirations and meeting them through clear business strategies, are likely to go long way in times to come….watch out for how industry leadership positions in several industries change in next few years….they will change hands much faster than they would have in good times.

Cheers

Creating Organization Structure – Strategy, Operations and People

  

There are so many views about how does one create structure for an organizations that usually it boils down to ones conviction about what will work and what will not work. Given the far reaching impact of structure on delivering strategy, unfortunately this can have unpredictable implications. In addition due to the lagging effect and gestation period, it’s too late by the time one discovers if the structure designed is working well or not.

 

While structure is such an interesting point of view based exercise at times, there isn’t any laundry list of dos and don’ts for an effective exercise; in my experience some of the following factors impact the same in one way or another:

 

-          Strategy (future scenario) and Process (operations management) are two key levers in any situation. However it’s very critical to understand the trigger for the exercise. Basis the strategy and trigger the relative focus on the two levers could change.

 

-          A very deep process view based exercise is usually triggered by productivity and efficiency enhancement kind of strategies, which is only one of the possible strategies. Basis whether the business strategy is of growth, returns, diversification, product focus, market focus, efficiency focus, productivity focus etc. the approach to the exercise could be drastically different. High level phases might read the same though to naked eye.

 

-          Broad dimensions of structure are Product, customer and geography/market. Even though these elements will remain in any structure, depending upon how the interplay of these dimensions plays out at various levels in the organization, number of structure options is almost endless.

 

-          Matrix structure is more articulation of reporting relationships and MIS and not so much of structure. This is more about how one wants the operations to flow in terms of people interactions and decisions.

 

-          MECE (Mutually Exclusive and Cumulatively Exhaustive) is a very simple but important concept that every structure options must qualify. This in itself can ensure better traction and growth compared to a rather convoluted structure.

 

-          In most cases distortion happens when you start to map people and make adjustments due to ‘sensitivities’… but that’s the reality of every organization.

 

-          Structure, MIS, Variable pay can impact behaviors and culture in a desired direction

 

 

~~Rohit~~

 

 

Circus of 360 Degree for Performance Evaluation

  

Now it is very uncommon to come across learned professionals talking about 360 degree evaluation mechanism as the way to go “once an organization reaches maturity” as they would say.

 

For non HR professionals like me, it’s something that is really astonishing. This is a system I have seen been deployed by some of the most “mature” organizations who are seen as thought leaders in their respective verticals.

 

So 360 degree is a “open system” wherein one receives feedback on their performance against set goals from peers, subordinates and seniors. Unlike the evaluation been done by just your manager, everyone directly working with, gets an opportunity to impact and hence reducing any manager bias. The system in itself is very good and mature indeed…but for performance evaluation?

 

Shouldn’t performance by evaluated automatically by the databases and MIS instead of “opinions”. One can understand there are possibly measures for which numerical data does not exist (typically that is what MIS and databases support), but does that mean a Performance Management System that primarily runs on 360 degree.

 

How many times do you come across such quantifiable and established “beyond doubt” measures that do a merry round in a 360 degree environment for rating on a scale by multiple people. Some interesting real life examples are follows:

 

Objective: To achieve defined sales for Product X in the next 12 months

Objective: Ensure desired level of profitability

Objective: Collections of all debtors outstanding in time

 

What purpose does it achieve by having people give ratings on these when you don’t need any individual judgment really? At the end of the day manager will get feedback from 5-6 individuals with different ratings, he will then in all probabilities take the median and finalize the rating. My bet is in these “mature organizations” this final rating with then also go for normalization…..I guess its only god who knows if there is any sense in whatever comes out of this circus J

In the end what could have helped in measuring “some” qualitative measures and help largely in developmental needs, has become “the system” in several organizations.

 

 

~~Rohit~~

Demand and Supply of HR Professionals

 

I am back after a long hiatus for the past month or so J

 

CII conducts a national seminar on HR Challenges each year……representing knowledge partner for this year, Hewitt Associates, as well being member of CII committee, I have been a bit occupied lately. However the forum gave several of us opportunity to talk about interesting times ahead and people challenges in wake of such scenario. The theme of the forum was aptly “The Winning HR Strategies”.

 

While in some of my later blog I will talk about summary of the discussions, one interesting challenge is demand and supply situation of HR Professionals themselves. Unless there is enough of this community (in terms of both numbers and skill sets), several of larger people challenges will remain unaddressed. Let’s have a closer look at this aspect.

 

Supply View

1        If we look at all Tier 1, Tier 2 and decent Tier 3 Business schools together and the number of HR professionals they are churning out, the number is likely to be in the range of 600-800 at best.

2        Worse if one looks at number of people with skill sets adequate to match the challenges of current environment, its likely to be 150-200. The reason I say so is because most of the others are still in traditional HR/IR mindset/skill set mould.

3        Given the reality that several of these students comprises of women, there is a drop out rate of about 10-15% out of this from active work life post marriage or children

4        Almost 15-20% of these go on to join recruitment firms or open their own recruitment/training firms

5        In nutshell we are left with about not more than 60-65% of the total 600-800 overall population and 150-200 of what you can call as premier mass available

 

Demand View

1        The demand per organization is atleast an average of 8-10 HR professionals for the Top 100 companies on BT 500 list (Top 500 organizations of country by various financial parameters), in addition to what one can probably classify as administrative staff

2        Demand for the next 400 on the BT list is likely to be around 3-4 on average

3        Demand for the next 1500 organizations is likely to be atleast 1 HR professional on average

4        At the moment it’s probably a safe assumption in organizations over the Top 2000 list, Promoter/CEO mostly or in some cases Finance person assumes HR role as well. HR in these organizations is mostly about salary increases and promotions.

5        In addition to this domestic market there is a huge demand created by multinationals operating in India. That number is likely to be close to 3-4 for around 500 multinational organizations given their more organized set up.

6        Hence purely speaking demand is influenced by Top 2000 domestic organizations and about 500 multinationals in market today.

7        By assumptions above we are talking about a demand for about 6000-7000 professionals

 

 

The overall situation looking at numbers above does not look too good for sure. Perhaps the most important element of this demand and supply situation is the fact this demand is maximum at the middle and senior level in most organizations. Gap is even more acute at that level.

 

One of the solutions to this problem in my view is “HR for Non HR”. We need more and more business and cross functional people to be trained on aspects related to people challenges. In my view not only will that improve the situation, many of these ‘inside business’ guys will go on to become more successful HR professionals J

 

What are your views on the current demand supply situation and means of improving the same?

 

~~Rohit~~

Engaging a New Employee

 

Recently I came across this interesting article/practice at Patni Computers:

 

On his first day to work at Patni Computers, 23 year old Arshad Shaikh had sweaty palms and an itchy neck. The mild apprehension of how his first day at work would be was worrying him. But, surprise surprise! A badge with a smiley face and ‘Just Joined’ stamped on it was given to him. “I can’t tell you how good I felt that day. There were unknown faces coming up to me and offering help. This practice we have, called ‘Just Joined’ is a great HR practice,” gushes Shaikh, senior analyst, Patni. “Moreover, all the process related information was shared with me right on day one to make things easier. I felt settled from the first day itself,” he adds.

 

There are numerous reports that would tell us how 70% of employees leave within the first 1 year of joining. People who stay on for more than a year have a high likelihood of completing a good run with the Company. Knowing this fact the entire period of pre-joining formalities, induction program and post joining first 1 year of engaging employee becomes extremely important. Having said that most of the companies have a ‘standard’ induction manual that’s delivered like work as usual in first week of joining etc and else everything just operates as usual for all employees. There isn’t much to differentiate between programs or ways of engaging employees as far as new employees are concerned.

 

While I have come across some very interesting practices in various organizations, I found this something very interesting….small initiative but interesting. Might be bordering more on a IT/ITES (BPO) environment though.

 

Have you come across any interesting practices in Service Industry in particular….???

 

~~Rohit~~