HR in times of recession, Aug 03, 2009
The ‘Florence Nightingales of the corporate world’ dwell on what it takes to shore up employee confidence..

K. Bharat Kumar

Human resources management, after nursing, is the most stressful job on earth;

Want another job? Search inside your company;

Today, zero increments are all right, but whoever said anything about nil promotions?

These were but a few of the pearls of wisdom that eWorld gained in a discussion with Hema Ravichandar, independent Consultant, Mercer, HR Consulting; Mahalingam C, Executive Vice-President and Chief People Officer, Symphony Services; S.V. Nathan, Director-Talent, Deloitte Consulting; and Elango R, Chief HR Officer, MphasiS.

Nasscom, the IT-BPO industry’s apex organisation, brought together these four leaders at its recent HR summit in Chennai. The chat helped us gain insight into HR, a barely understood facet of the IT organisation.

eWorld: A slowdown is a great time for innovation, people tell us. What happened in your companies these past 8-9 months?

Nathan: From the business angle, we started two things that gave added value. We looked at internal mobility. If we require skills that our existing manpower itself can provide, then it’s easier than looking outside. It helps people remain motivated.

Out of 10,500 people, 500 have used this in the last nine months. It’s tremendous value. We have also looked at managerial skills as an area. For me in HR, I used to think that a manager in the HR function needed to be from XLRI or Tata Institute of Social Sciences or the IIMs. Today, I am much changed. You need all that expertise, but what it requires today is an open mind.

Next, we helped people look at compensation in a wholesome fashion. HR needs to know the value of communicating value. Everyone knows that increments are going to be modest and all that. They need to look at total rewards. What does it mean to work right now? What does it mean from a learning perspective? What does it mean from an internal mobility point of view? What does it mean for you to belong to a company like Deloitte and look at all the tangibles and intangibles. We started something called ‘Experience your Deloitte’. It’s a programme where all we do is give space on our intranet and have people talk about their stories.

We use the blog widely because the kids of today don’t want any presentations. When an employee says, on the blog, that he called the admin folks at 2 a.m. because his parent was suffering from a medical condition and that in 20 minutes the insurance details were fixed, then that’s something.

We also look at something called “commitment index”. It used take two, three or even five years to notch it up by one percentage point . We were around 77 last year and I struggled for four years before we got there. This year, it has jumped about 5 points.

Finally, HR in itself needs healing. It is a very stressful period for HR professionals. Nursing is the most stressful job on earth. HR is right behind.

Things which didn’t bother us too much earlier are things we have got to come to terms with and we have to get people to think about what it means to them. I do a lot of sensitivity training for many of our people in HR.

Elango: We should stop treating HR as a function. HR does not exist on its own. I think we’ve made such a big science of it that we have five HR guys in one room — you will hear commitment index, you will hear abbreviations and acronyms, cognitive therapy, all kinds of stuff, right? I think we’ve got to get away from this. We have got to realise that we are business people at the end of the day, we are not HR guys. We are not there for doing our processes; we are only there to support the business.

Hema has talked about the SQ (see below). I am going to change that from Spiritual to Survival quotient. As HR head, if I were to define a power role, that is to build a survival quotient of the business and of the people, clearly on both sides. How many people understand the P&L (profit and loss statement)? I did a random survey last year. Most people who were asked about P&L replied with: Is that an ocean-liner? Or is it a retail brand?

Most HR people do not understand these P&L statements. In our business, 50 per cent of our cost is movable (people) cost, and that’s what we control. The HR has more control over the P&L statements than the CEO does, in a sense. Over the years, HR has attracted people that are pure HR professionals, but not business professionals.

How do you become the bridge for business and the people? I think we swing both ways. There are some HR guys who are saints, bleeding souls, who want do everything in sight, whereas some are very obedient to the CEO. Can you reach the balance?

Last year, when we had to cut costs in reaction to the environment, some of our people asked us a fundamental question: “Why do you want to cut costs?”

Clearly it wasn’t obvious. We explained to people that we earned Rs 100 and spent Rs 78 (since our margins were around 20-22 per cent). If your revenue slumps to Rs 90, and in some cases to Rs 75, and your Rs 78 expense remains the same, then you are in trouble. We changed that from a cost problem to a Rs 78 problem. We made it a contextual problem.

A CEO may think of quarterly results or the quality of his resume if a company tanks. But the average employee is worried about his EMI, his son’s school fees, etc. The perspective is important.

Finally, we have this save-the-dollar campaign running. One employee noticed the HR helpdesk sends at least 300 couriers a day at Rs 30 per dispatch. He knew of a company that does it for Rs 10. That was a straight-off Rs 15 lakh a year cut in expenses.

Hema: This is the time when customers are literally crying out for help. And if HR is not able to align to business requirements now, then it is not really working. HR has a responsibility to go out and engage with (people). It’s tough because, often, there can be a lot of vitriol in the system, but HR has to go out and engage.

Also, HR has to set up its own internal communication game-plan. It has to really set the vision, firm up processes, have a series of FAQs, handhold line managers through whom they have to communicate hard decisions down the line. So, we should handle internal communications as a mission and with a system and purpose.

In the growth phase, you do more with more. Now, you have to do more with less. You have to innovate.

HR also has to involve its key customers in policymaking, whether it is looking at policy aggressively or whether it is cutting down some employee benefits. It has to be a participative decision. But to do all of this, HR needs to know the business. In addition, its SQ, or what I call the Spiritual Quotient, should be high.

SQ is the ability to do your best and leave the rest. If you start brooding and worrying, you will kill yourself. Finally, however rough this time is, when you look back, it will be the time when HR professionals have learnt the most.

Mahalingam: Among all the businessenabling functions, HR alone is entitled, and equipped, to innovate. I would say (in jest) that admin folks renovate, the legal guys novate, and finance should not innovate if the CEO wants to keep out of jail. That leaves HR.

Innovation is not a fixed kind of a thing, it is a culture. And culture belongs to leadership and largely HR. We started our Innovation Protocol (IP). Through this web portal, suggestions from everyone in the company are welcome. We have identified qualified, technology-savvy architects as innovation mentors. We trained them extensively.

We have in the last 18 months filed 33 patents (applications) for our clients. Eighty one per cent of our employees participate in this innovation programme. Over 5,000 ideas got created in the last 12 months alone. And we got these ideas validated by our clients, for they must make sense for our clients. For a handful of clients, it resulted in anything north of $10 million in excess revenues — revenues that are attributable to our innovation programme.

Our HR executives are no longer busy with exit interviews, but with stay interviews, trying to find out what makes people stay and what makes people think well of the company.

In a year of nil increments, we restructured compensation so that people can get a little bit more out of the unchanged compensation.

For example, the IT Act permits conveyance reimbursement even for two-wheelers. Most companies allow reimbursement only for conveyance by four-wheelers. Between 60 and 70 per cent of IT professionals own two-wheelers.

Finally, in response to employee feedback, we effected promotions without necessarily giving salary increases. This keeps the morale high.

Likewise, in our New York office, every Friday, a courier dispatch goes out. An administrative assistant, not your usual CEO, told us that she did some analysis: 80 per cent of the average half-a-kilo that goes out weekly is only bills. Only 20 per cent is of some material significance. She asked if she could not scan those bills and send them electronically. Why didn’t we think of it earlier? A lot of companies do a lot of stupid things. The difference really is to get employees to participate. But again, no one is going to tell you that the HR team is responsible for these benefits accruing to the company. That’s because we have made it part of the business deal.

Hema: If you look at the examples from around the table, specifically the two timeframes — 2001 to 2003 and now, in one way the industry, and maybe the HR function, has really matured. We have learnt from that.

Elango: The difference is this: Last time around, the industry looked at it quarter by quarter. What’s your manpower cost? Go cut your bench. Hundred people got to go is the mandate that is laid down and you are just going to slice. But this time, we aren’t doing that. We are doing a lot more — what you rightly said is a systemic solution.

Hema: It is participatory, articulate, all about taking suggestions, about communicating, about engaging (people).

eWorld: There are confounding signals that your industry is sending out to laymen outside… We see revenues stagnating, but people have not been going out in tens of thousands, but top executives (just below top management) have been getting more than adequate raises (among TCS, Infosys and Wipro, a minimum increment of Rs 3 lakh for vice-presidents upwards to sometimes Rs 10 lakh). Fresher salaries have stagnated. What exactly is happening?

Nathan: You are on the spot. It is now that you need to have all your big boys with you. It’s very important. Mind your keepers and keep your minders. Keepers are the people who really run the business, who are very passionate and are high performers. So you want to send them a clear signal. Why do people leave an organisation? People leave for lack of feel. They don’t feel valued. Anytime, when a person feels less than valued, he would leave. So, don’t look at this 3 lakhs in isolation, it’s a signal that you’re valued.

Elango: In managing the downturn this time, most companies looked at cost management systemically — they had the focus. We’ve constantly been talking manpower costs, bench utilisation.

Hema: The industry has learnt from the last downturn — the costs of not communicating. We communicated what and how, not the ‘why’. This time it’s different.

Elango: You now have a concentration of HR people who have seen it and done it, and have institutionalised practices coming out of it.

Nathan: Very curiously, our chief strategy officer in 2007-end met with all of us and ran us through the downturn of — hold your breath — 2010. It was very clear to them that the ten-year cycle is soon to be upon us — 1970, 1980, 90s, 2000. It was incredible. We just didn’t want to believe it.

Mahalingam: As an industry we have to come to recognise that every customer is unique. We have moved on from looking at every individual as a customer to looking at every customer as an individual.

We have also started to leverage global resources. People, infrastructure, finance… on all fronts. These are lessons that we learnt during our earlier, difficult times.

eWorld: With supply of manpower exceeding demand right now, what consequences do you foresee?

Mahalingam: Trust me, 40 per cent of the resumes doing the rounds in the IT industry are fake and fudged.

Hema: So, employment verification will have to be stringent. Look back at the 2001-02 time. Without solid experience in 2002-2003, resumes were fudged so that applicants could get jobs post 2004. That could happen again, now.

The positive thing is that you know this mad rush towards IT and IT-enabled services will kind of (peter out). Mechanical engineering, aeronautical engineering, chemical engineering and the civil engineering streams should benefit.

eWorld: But employability of graduates was a concern even when the times were good!

Mahalingam: Right. Two things need to happen. Substantially, revamp curriculum so that when the industry really picks up, you are able to hit the ground running. Why not emulate the practices in medical education? Students go through a four-year education and a year of residency practice. They are very well equipped, whereas in the engineering industry, the internship period today is anywhere between three and six months, which is just not enough to make them industry-ready.

Two, parents, industry and academia share the responsibility. What is now becoming very clear is aspirations management... aspirations in terms of growth, salary, career path. Let me recall a quote from Ricardo Semmler, the maverick CEO of Semco. He asks, “How far can you go into the forest?” People give you many answers, that you can go into the forest so far as you don’t fear safety to yourself, your physical self, as far as your supplies in the backpack permit, as far as you can retrace your path, the fact that I am alive, etc. He would say all those answers are logical but not correct! Correct answer is “only up to the midpoint”, for, beyond the midpoint you are exiting the forest, and you are not entering it anymore. So, every career has a limitation, like it or not.

Three, the government has a significant role to play. If it takes appropriate steps to digitise core documents, I mean the egovernance-related stuff, we could potentially employ about 500,000 engineers to complete the project.