Friday, October 31, 2008

Doing More with Less

Recently I was in a meeting with a potential client discussing some issues they were facing and how they thought they can resolve. One of the solutions they want implemented is a Bonus system to reward a particular behaviour, they also wanted to add an element of retention to it by deferring this award so that people look forward to staying that extra duration to get the bonus.

Many a times companies end up trying to achieve too many things from one program, thereby losing track of the actual intent too in the bargain.

One of the things to note is that the bonus does not on its own drive the behaviour, but the communication around it, the messaging of the managers, the show of intent by leadership, the support of the performance program and many others things have to contribute to making any of these programs successful. Hence just getting a bonus program in place does not help at all unless backed with many other things. Similarly retention can't be achieved by deferring payouts, one has to carefully think about various other aspects of the job that need to be addressed to achieve retention.

Hence my advice is to follow one simple principle. Each program has its specific purpose, fixed pay is to provide for doing a job at the target level, variable pay is to drive particular intended behaviours, Stocks are for creating sense of ownership in the company, deferred payouts are ways of retention, use them for these purposes and back them up with other initiatives to ensure that people find them interlinked with all the other objectives they have to meet.

Also don't try to do too many things with each program, let them focus on one aspect which will give the best returns.

Friday, October 24, 2008

Trim the Fat

It seems like time to trim the fat, I wish I could do this as easily for the fat on my tummy :-).

Times are bad and pay-cuts, job-losses are the order of the day. Everyday brings another bad news and people are completely lost about what to do about their careers. The fear of Am I going out next is very high.

My earlier post around CSR was a reaction to the Jet fiasco, but if one has to seriously look at how companies should respond to the situation that we are faced with today, we would probably come up with a good CSR model.

There are two ways of responding to a difficult situation, one is the easy one and the other is the hard but the right one. The easiest thing that most companies can do in a situation like this is go for mass lay-offs, which is how most companies respond. The hard way and the right way is to look at expense optimisation. This is not easy and not quick, but definitely will end up helping a whole lot of people in the country and also the whole economy, in a significant way.

Over the last few years, the biggest increase in cost has happened on the salary front, and especially top management salaries. The gap between the salary of a fresh recruit and the salary of the CEO has become so wide that at times it does not seem to make sense. Now is the time for most companies to have a re-look, first at their Top-Mgmt compensation and then at the other levels of the company, and rationalise salaries to a meaning ful level. This will help us as a country to become cost competitive once again and make India the prefered destination for goods and services. Also a good time to have a serious look at all expense heads and see opportunities to save before the final call on lay-offs is taken. There is a chance that we can save a lot of people's jobs and come out stronger as a country. The last one with a big hope that the politicians will let this country grow stronger, which does not seem like their intent given the religion, caste, regionalism and other issues they are raking to win votes.

My simple thought in difficult times is to think about solutions which will help a lot many more people than a handful of investors in the short term.

Wishing everyone a Happy Diwali!!

Wednesday, October 15, 2008

Corporate Social Responsibility

I am so scared of reading the newspaper these days. Everyday brings in a bigger bad news than the previous day and it just does not seem to be stopping.

Todays news about Jet Airways asking hundreds of people to leave without giving prior notice, information or explanation just made things worse.

I think job cuts are inevitable, given the market situation there will probably be lots of them, but do we have to do the job cuts the way they are being done. Suddenly one finds all the HR people, who used to proclaim their 'love for people' being the sole reason for joining HR, have forgotten the basic courtesy of giving bad news softly.

The news says Jet just couriered discharge letters to its employees a day prior to asking them to leave and no cabs came to pick people who were ready to come to office the next day, now given the state of our media, there could be lots of exaggeration here, but lets assume most part of this is true.

As an HR professional, I find this completely unacceptable on part of the HR function of the company to have done something as nasty and cowardly as what has been done here. In the past too I have seen other companies doing similar things. The worst part about this is the statements made by the Chairman of the company saying 'employees are our family'. If this is how he treats family, then God save his friends and foes.

My simple thought for HR folks, since you all love people, learn the basic courtesy of giving bad news softly. Don't just try to comply to the minimal legal requirements and understand the plight of people who will find themselves without jobs one sudden day, counsel them, talk to them, show empathy, maybe create opportunities for people to find alternate jobs or anything else that you would expect anyone else throwing you out to do for you, remember if all others will lose jobs, someday the HR guy also has to.....