A
new market - a different context
After
the ears heard the good old mouths talking day and night about downsizing,
rightsizing and outsizing, it is really hard to get the heads around the idea
that things are entirely different in a new market. For a job seeker in this
market, the time is just right with opportunities at the doorstep. But a
manager in this market has a tough time in retaining assets that may decide
not to return the next morning once out of the gates in the evening.
This
new market is an information flood coming at lighting speed that plans to
change the way we buy and sell, what we make, when we make it, what we value,
and where we live? Knowledge, the driver of this market, is an intangible
asset that appreciates with time and it’s proper nurturing can decide the
heart of annual reports and financial statements.
A
knowledge worker can be defined as one who uses the head more than the hand to
produce value – one who adds value through ideas, analysis, judgement,
synthesis and design. These workers are not restricted to the high tech
companies; this article however deals with knowledge workers in the Indian IT
industry.
The
old market is about ‘ congealed resources’ – a lot of material held
together by a bit of knowledge such as a table. The new market is about
‘congealed knowledge’ – a lot of intellectual content in a physical
slipcase, such as software; the value is not the diskette but the brainpower
accessed when bought.
Human
contribution is lumped under the heading of ‘goodwill’ in the above
equation. Over the last one or two decades, this factor has gotten bigger and
bigger. Wealth, jobs and competitive advantage are no longer primarily a
matter of machines and tools but of brains and harnessing those brains.
HR
practices
A
change in the profile
The
employee profile in this industry is of brilliant graduates from IITs, IIMs,
other management and professional institutes who are unlike the old meek,
docile graduates. Moreover, every year the complexion changes with the
incoming of much more skilled and knowledgeable successors compared to their
predecessors. Again, the common phenomenon observed is that bubbling
aspirations and expectations make these young and hot shot knowledge workers
job-hop for more value addition, not necessarily money, at the drop of a hat.
In
the light of these brewing changes, the HR profession has refined and
redefined its boundaries on how to subscribe to the new value system and
create ‘promoting’ environments, ‘additive’ atmospheres,
‘adoptive’ climates and ‘transformative’ cultures – a paradigm shift
from ‘fulfilling requirements’ to ‘being accountable for organizational
effectiveness’. “Let the
employees feel open and contented.” – is the general attitude of employers
in this industry – “Is there a better way of managing employees than this
when their median age is just about 26 years! “
This
country doesn’t have a dearth of competent technical and scientific
manpower. Yet learning from the Fortune 500 companies, where about one in
five, employ a chief knowledge officer to manage knowledge and knowledge
workers, this industry’s mission has changed to be more of a managerial
challenge than a technical one. The ‘perfected’ and ‘precise’ mission
statements are multi-dimensional and multi-faceted; assertive as well as
aggressive.
Problems
Many
foreign companies have eyed on India to start up their projects; this has
multiplied problems in recruiting manpower. Demand for compensation is on rise
and these knowledge-based industries are in fierce competition in campus
recruitment to grab the best, the most anticipatory lot to achieve in future,
with assuring and alluring pay packets. The motive to hire and retain the
country’s cream has made manpower costly.
Attract
people by offering a fat salary and then hook them by bounties, fancy
designations and acronyms - all this is yet to take care of the high employee
turnover scenario with attrition levels as high as 30 %! Simply throwing money
at the problem or at the people only raises the worries of doing business
leading to a zero-sum game. Paying more for the players and neither
necessarily getting better ones nor improving the game is a serious issue.
HR
managers are adopting the ‘family’ approach
- a proactive and participative role for employers in the lives of
employees. This is executed by offering a host of facilities like plumbing,
electrical works, carpentry, payment of telephone bills etc. Other similar
packages include an in-house doctor, professional help for personal tax
planning and a travel department taking care of personal travel arrangements.
A few companies have gone an extra mile to assist employees in bank
transactions, availing credit cards at concessional rates and getting school
admissions for children.
Another
wave brought about by this industry is the transformation of the underlying
work ethos. Home and work life is no longer compartmentalized; the two realms
now overlap, they are harmonized. A conducive work environment and a receptive
work culture facilitate people to contribute their best. Open forums discuss
problems - professional or personal.
“A company should entrust its
destiny to its people.”
Several
IT start-ups and majors are in a dilemma on how to tackle people who use
office communications infrastructure, like phone, e-mail and the Internet, to
find placements abroad. Certain companies believe in positive reinforcements
by adopting the practice of internally posting job vacancies that exist in
other IT companies round the world. The single most important factor that
works out in such cases is trust and loyalty. Research is showing that
customer loyalty is determined by employee loyalty. Employees are no longer
asked to punch cards; encouraged by not punishing failures and rewarded if
mistakes are admitted.
An
employee stock option (ESOP) has been a buzzword for MNCs, and this industry
is increasingly regarding it as a possible employee retention tool. Depending
on the firm's annual performance, an employee is given shares, which (s)he is
entitled to at the end of a stipulated lock-in period which ensures the
staying back of a sizeable chunk. Stock options are the most prevalent
variable pay plans in this market today.
Some
HR managers in the IT industry have made their stand clear that they do not
want to attract people based on compensation, or lose them due to
compensation. But the reality that every company is trying to sell itself by
claiming to be the highest paymasters is making things highly competitive. Yet
the real question is, are the employees looking for financial gains or
learning opportunities or emotional links? Surveys have shown that the last
one is really important for Indians. Companies have realized that only by
giving monetary benefits, people cannot be made to work with a sense of
direction, commitment and belonging. Money is important but so is personal
recognition.
How
value additive is the Work?
Companies
retain employees only by keeping them effectively engaged, which not many
Indian IT firms are managing to do effectively. This only says that, ‘all
greenbacks and very little work is turning Jack into a cynical, frustrated
boy!’ A well known complaint
targeted at the MNCs and the IT start ups is that all the time gets spent bug
fixing or testing the software developed at parent companies in the United
States or abroad. The quality of work is not, what that is promised, as design
and new product initiation is not done in India. Most often, the number of
engineers put on to a particular project is in excess of what is required
leading to a feeling that their potential is not properly utilized.
The
changes that are taking place in information and communication technology and
ever enlarging business horizon have also provided this breed of knowledge
workers with the opportunity to hop more and more inside and outside national
boundaries. Conscious of their rights, they question the old policies, values,
standards, leadership and working styles and seek more autonomy. It is a very
daunting task to keep them motivated within the four walls of a single
industry for more years, not to talk of life long.
There
are many external influences impacting employees to quit like opportunities
(20 times as many job openings as candidates abroad), dollar lure, peer
pressure (including classmates, friends, ex-colleagues in India or abroad)
which are really beyond the direct control of the organization. Indian
software companies cannot and may not (for strategic reasons of compensation,
labour cost advantage to MNCs operating in India, and legal issues of paying
in foreign currency) compensate in dollars in order to hold back the employees
from going abroad.
To
understand requirements in the area of new projects won, or the future
projects that the managers are going to bid for, the HR department in IT
industries proposes to meet quarterly all senior managers. An exercise is
conducted where new competencies required for emerging business needs are
conceptualized.
Routine
training culture where training is imparted in number of man-days is proposed
to be replaced by creating a system that provides learning as per the
employee’s requirement. Since, the overflow of business across international
boundaries and mobility of human resources are likely to create culture
clashes, necessary preparation for smooth managing of cultural transition
needs to be a part of the training modules.
Side
by side with technical knowledge, the exigencies of growth require that
knowledge workers acquire managerial capabilities. Compared to conventional
organizations, knowledge workers in software organizations are expected to
assume leadership roles much earlier in their careers. HR practices need to
help them to be up to date in their respective technical streams as well as
enabling them to acquire leadership capabilities.
According
to surveys, a majority of the IT employees leave their jobs for a promotion,
want for flexibility or autonomy at work. Solutions to these are proposed in
various alternate work options: flexi-time, telecommuting, and job-sharing
(where the company hires two persons for one post allowing a part-time
arrangement between them).
Manpower Planning
In
order to manage high turnover of employees, IT companies are recruiting more
manpower than what is required in order to ensure that there are enough human
resources to cope with projects. It costs as much as 1.5 times the annual wage
of knowledge worker to effectively replace him/her by another in the market.
(Replacement cost = net income lost to organization i.e. net benefit that
would have accrued to the company had the employee not resigned + recruitment
cost + unrecovered salary of new employee during his/her learning period i.e.
induction and training). Manpower planning must be reworked at as unlike other
companies, which bear replacement costs after employees leave, IT companies
are incurring this cost all the time.
Since
project teams are usually temporary with project duration being 3 months to
one year, it becomes all the more important to ensure that team members
familiarize themselves and enjoy working with each other quickly. This
necessitates promotion of team building beyond the office hours and company
gates in clubs, gymnasiums etc.
It is ironical that the very market value which an IT company creates for its’ employees, makes it conducive for them to leave. An attempt by HR mangers of IT companies to give some other value(s), apart from market value and to influence the society at large, by influencing the employee and his/her family would not only help retaining better human resources but also reshaping the ‘man’ part of ‘man’agement.