Category: HRD

What does Jack Welch (The legendary CEO of GE) and McKinsey have in common when it comes to managing talent? Both of them seem to agree on the same thing when it comes to managing talent within an organization. In order to build a great company you need to employ great people. What actually are A , B and C graders ? “A” grade employees are people that deliver beyond what they are expected to deliver. Look at your best designer, best programmer, best sales guy, best support technician or, look at the best people with the same level (i.e. having same designation), your best manager, your best project lead. – they are the “A” graders within your company. The people whom you truly consider your assets! “B” grade employee are people who are consistent performers. They don’t do exceptional things but they are fairly consistent at what they are doing. According to Jack Welch – “They are on the fence” “C” grade employees are poor performers who either cannot deliver results or require too much pushing. Why can’t you hire “A” Grader directly? The problem is that there is no sure shot technique that will guarantee that you will have all the “A” class guys working for you. There are not many of them around! Even if you can come up with an objective shortlisting process that can help identify a super-performer from an average-performer, meeting the numbers will be quite a challenge – specially if your company is growing at 100% every year. If you think that everybody who works for you is an “A” grade gut then you have simply not raised the bar high enough. The good news is that hiring “B” grade performers is not that difficult and as it turns out, it is a better strategy too. There are following possibilities with a guy who is at “B” grade: He will turn out to be a “A” grader (Tiger within Sheep’s skin!) They will remain “B” graders They will actually turn out to be “C” graders There is a real competition out there for hiring talent. McKinsey says that this “war for talent” requires a new way of thinking for attracting and retaining quality talent:  The Old Way The New Way Talent Mindset HR is responsible for people management. All managers – starting with the CEO – are accountable for strengthening their talent pool. Employee Value Proposition We provide good pay and benefits. We shape our company, even our strategy, to appeal to talented people. Recruiting Recruiting is like purchasing. Recruiting is like marketing. Growing Leaders We think development happens in training programs. We fuel development through stretch jobs, coaching, and mentoring. Differentiation We treat everyone the same, and like to think that everyone is equally capable. We affirm all our people, but invest differentially in our A, B, and C player So you are in a safe position as long as you have a process to recognize and reward the “A” grade people, attract, train and upgrade the “B” grade people and most importantly, identify and get rid of “C” grade employees. Why getting rid of “C” grade people is important? There are a lot of reasons why you should get rid of poor performers: 1. You stand for what you tolerate. If you tolerate incompetence then you and your organization stands for it. 2. There is lot of effort required in converting “C” graders to “B” grade. At the same time remember that your “A” graders and “B” graders are spending their time on “C” graders. It’s like throwing an olympic swimmer into a pool with weights tied to his waist and then expecting him to win the race. I firmly believe that the results will be much better if a “A” grade employee spends time on “B” grade than on “C” grade. How to avoid hiring “C” graders? I think “C” graders are terrible at recruiting. If you believe, that a person is below average (either within the organization or amongst peers) then that worst thing that you can do is let them hire other employees. So, you should only allow your best and brightest people to select future employees of the organization. Remember, no one can hire someone better than himself. So, while “A” graders will hire “B” graders, “B” and “C” graders will hire even more “C” graders. Let’s begin the new year by cleaning up some deadwood. Shall we!?

Every executive and his dog have thought about incentive schemes that will give the company a performance boost. Incentives schemes are bribes that is given to people for doing things they were already supposed to do. The problem with incentives is that it works only too well. Here is what you need to think about:  Is the incentive system simple enough? Complicated incentive systems look fishy. If you want people to trust the system then you have to make it simple enough so that everyone can understand it. If the people won’t understand what they need to do, it won’t get done anyways. I once interviewed someone for the post of business development manager and her incentive scheme was nothing less than an MLM program.  How much is it going to cost to have an incentive program? Incentive program requires collection and analysis of data which requires resources like people and time. The more complicated the program is, the more difficult and resource consuming the job becomes. We once implemented a program called “the point system” in which every employee earned 1 point for every $25 worth of production.  Every employee had a target set of points that they were supposed to accumulate in a given month. This target was set based on the average costs of his business unit. The idea was simple, we wanted to focus on revenue per person (PPR) and it seemed logical to provide incentives to person whose PPR is higher than the target. The most important point was that it gave us quantitative data for performance analysis.  This program seemed brilliant at the moment, but later the cost of administering the program was so high and it was so counter-productive that we closed it within 4 months of its implementation. It produced 20 pages for each team every month and some 300 sheets in total that had to be verified, analyzed and tracked.  Is the goal achievable? It makes sense to set the goal slightly higher than the normal but, setting it too high is an obvious way to kill all motivation. If I know that the defect-rate is 10%, then it makes sense to provide incentive for reducing it to 5%-7% but giving an incentive for 0% defect-rate will only have your employees laughing at your back!  Will increased effort lead to increased performance? Wait for moment to let that question sink in first.  If your employees are ineffective because of your company’s systems and processes then no amount of incentives is going to make them more effective.  Incentives, especially in the form of financial reward can be a great motivator and it can get people working really very hard. However, people still got on work with the processes and structures within the organization and if that’s not efficient then raw hard work will not lead to superior performance.  People will slog endlessly, only to find at the end that the target has not been achieved. Thus, they will be de-motivated because they have done all they can to achieve a reasonable goal but still the money has eluded them. Running on ice will slow down the best sprinters!  What behavior am I encouraging? Behavior is a result of consequences. There six elements of project i.e. Scope, Cost, Quality, Risk, Time and Customer Satisfaction. This forms a perfect hexagon in which every element has impact on all others. Pull one and other 5 gets drawn too. The problem is that incentives focuses the attention of employees like a laser beam, all periphery vision is lost. Thus, giving incentive for “on-time” delivery will mean that people will forget about other five things because to them, it means that “on-time” delivery must be most important to management.  People are smart and they will soon figure out a way to meet the objectives may be at the cost of quality or customer satisfaction.  Incentives is not just about throwing in money to get things done, for all you know it may be changing the way your organizations expectations, thought process and behavior forever. Employees will begin to judge the importance of the job by checking whether it has an incentive scheme tied to it or not.  Things that don’t have incentives will not be considered important. IMHO paying decent salaries, treating people well and maintaining the right culture is far more important and useful then crazy incentive schemes. 

The Rule: You will always feel you are underpaid. Want to know why? Read on. The following gets answered or at least thought about when the management wants to decide about salary appraisals: 1. Change in costs and revenue over the next year. For the uninitiated, the difference between two is called “Profit”. No company can survive without it. 2. Mitigating the change in the cost by choosing from multiple alternatives i.e. change in pricing or cost averaging.  Price sensitivity of its customers is an important factor here because the way Deccan Airlines (or Southwest Airlines) will conduct appraisals will be different from Kingfisher airlines (or United Air). 3. Compensation data with respect to the local geography amongst companies of same size. For us it means considering the disparity among salary structure for similar skills and experience across multiple locations. 4. Consideration for budgets for different departments. The appraisal budget will be different for different departments. 5. Performance Rating patterns emerged in bell curve (for your division, your unit and then deciding where you fall) 6. General outlook of the company towards future It’s a tall order. While the management is figuring this out, here is a question for an average Joe whose salary is due to be appraised. Choose an alternative from below: 1. Making a salary of 40000, when I say that others are making 30000 2. Making a salary of 50000, when I say that others are making 60000 Having a hard time answer? Do you see the point? While the management has a ton of factor to consider, our average Joe is just bothered about how much his cousin Nick or friend Peter or colleague Tom is making. Our average Joe will never be happy with his salary review because: 1. His expectation has got nothing to do with his own situation 2. Even if he gets what he wants, companies cannot control how the salary of others around him will change. As for the management, this is a thankless job that someone got to do!

Read the 3 conversation below: Conversation 1 Interviewer: “Why are you looking for a change?” Respondent: “for better career growth!” Interviewer: “What do you mean by that?” Responded: “umm… better salary” Conversation 2 Colleague 1: “I want to switch to Java?” Colleague 2: “Why do you want to do that?” Colleague 1: “The market is better for Java!” Colleague 2: “What market?” Colleague 1: “I mean salaries are higher” Conversation 3 Manager: “Why are you leaving ‘Change the World?’ to join ‘Make another Widget’ “? Employee: “They are paying me 3000 more” Did you find anything wrong with the above three conversations? In case you didn’t then please read the next case below: Conversation 4 You: “Why do you want to become a doctor?” Doctor 1: “Because there is lot of money in being a doctor” Doctor 2: “Because am interested in the subject and want to make lives better for people” Which one of the two doctors will you hire? Will your answers change if you are running a hospital viz. if you are a patient? I bet that in both the cases you will hire or visit the 2nd doctor. It’s strange to see that people are willing to make career decisions for money but they want to entrust their lives on people who are in their profession for something beyond money. Call it the height of double standards. As an organization we feel it is critical not to focus on money alone, because of the simple reason: If money bought them in, money will take them out. Sometimes a difference of only 2000 or 3000 is all that is takes. It is important to hire people who have the right attitude and who are willing to contribute. Too many times, I meet friends, MBA school grads, ex-employees, colleagues who seem to recklessly chasing the money regardless of what they are doing or like to do. They want to take up finance or switch to SAP because of the money is good. Once smart people, who could debate all day on various subjects, now know nothing beyond their narrow job profiles or worse, the dumb terminals which gawk and feed all day long. If a job is not allowing to you explore your potential but still it is paying you more than fair market salary then soon it you will loose the critical skills that landed you in that job in the first place. Sitting there all day and doing what you don’t like will create a big void in your life which will keep getting bigger and bigger until every ounce of self-worth has been squeezed out and you become completely risk averse. Money is important, I don’t question that, but your own sense of self worth is not derived from what you own but from what you are! Money as the primary content of job profile is not good. Customers will rely on the work that you do and if the job does not interests you then you will always do a lousy job. Remember what someone said: “Do you what you like to do and you don’t have to work for a single day”

The evening of 19th April was different at our HQ in Kolkata. There was a gathering some senior executives in the CEOs office where I ran a presentation on the proposal of restructuring the organization. The gathering also included some tehnical leads from our organization. The main idea was to get as many different views as possible. Here is a brief of that: The current organization structure In our current structure all authority and responsibilities lies with the functional heads; the structure is created by having separate departments such as Design, PHP, SEO.  This structure is not “pure devil” and it does have benefits like: It is simple and easy to understand Coordination across groups is left to the functional heads The organization overhead is low The career progression is clear Birds of a feather are flocking together Disadvantages of this structure? Coordination across departments on project that requires multiple type of specialization is poor CYA is easy, as the blame can be put on other departments. Separation of management and technical discipline is not there. No body is having the full-time job of managing projects and thinking about customer. Organizing by project teams  This will mean creating a structure that comprises of independent, self-sufficient project teams that exist autonomously within organization. This team will be assembled for a specific project under a project manager. The team will be temporary in nature and its member will be reallocated when the project is complete.  The project will be organized primarily around the project manager, and then a project team is formed. The project manager exercises direct and autonomous control over the various discipline groups and is responsible for the coordination and monitoring of the effort of the team. Benefits of this: Flexibility in allocation of resources Responsibility for project delivery lies with one person who is clearly identified Senior management is free from managing the project as there is now a full time project manager taking care of this. Thus, senior management can focus on Strategy etc. Disadvantages of this structure  Growth of individual technical skills for a team is not possible or very difficult The administrative overhead is very high in managing the resources when they are not allocated to a project Leverages exclusively on the project manager for delivery The managers may get overloaded with excess inflow of projects. The Alternative? Best of both worlds i.e. Matrix Structure In this structure the staff and resources that are required by the project manager are not permanently assigned to the project, but are obtained from a pool controlled and monitored by a functional head. People that are required to perform specific functions in a particular project are allocated as necessary and after their job is done they will be returned to the control of functional head for reassignment.  The members of the project team and their functional supervisors will have the responsibility for timely completion of allocated task within acceptable quality limits and they will report to both project manager and the functional heads.  Advantages of the creating a matrix organization  It has the benefits of both structures i.e. (current functional organization and project team structure). Allows for just-in-time allocation of resources based on problem at hand. The project personnel can retain belongingness with their functional team and still be accountable for projects as well. Allows independent growth in technology and management skills The customer relations can be better with having SPOC throughout project lifecycle Projects can be controlled better Profit margins on the project can be higher as resources having the right skills are allocated for the job instead of just having one person to do the entire thing which may require learning or rework Allows projects to be technically brilliant along with being well managed Disadvantages of the matrix organization There is a potential for conflict between functional vs. project groups. The administrative overhead is higher Increase in managerial overhead A person may be shifted across projects very frequently which may lead to insecurity. So, what’s the conclusion? Well, to be honest after hours of debate, we are yet to reach one! I will keep everybody posted on what is finally decided.

What does Jack Welch (The legendary CEO of GE) and McKinsey have in common when it comes to managing talent? Both of them seem to agree on the same thing when it comes to managing talent within an organization. In order to build a great company you need to employ great people. What actually are A , B and C graders ? “A” grade employees are people that deliver beyond what they are expected to deliver. Look at your best designer, best programmer, best sales guy, best support technician or, look at the best people with the same level (i.e. having same designation), your best manager, your best project lead. – they are the “A” graders within your company. The people whom you truly consider your assets! “B” grade employee are people who are consistent performers. They don’t do exceptional things but they are fairly consistent at what they are doing. According to Jack Welch – “They are on the fence” “C” grade employees are poor performers who either cannot deliver results or require too much pushing. Why can’t you hire “A” Grader directly? The problem is that there is no sure shot technique that will guarantee that you will have all the “A” class guys working for you. There are not many of them around! Even if you can come up with an objective shortlisting process that can help identify a super-performer from an average-performer, meeting the numbers will be quite a challenge – specially if your company is growing at 100% every year. If you think that everybody who works for you is an “A” grade gut then you have simply not raised the bar high enough. The good news is that hiring “B” grade performers is not that difficult and as it turns out, it is a better strategy too. There are following possibilities with a guy who is at “B” grade: He will turn out to be a “A” grader (Tiger within Sheep’s skin!) They will remain “B” graders They will actually turn out to be “C” graders There is a real competition out there for hiring talent. McKinsey says that this “war for talent” requires a new way of thinking for attracting and retaining quality talent:   The Old Way The New Way Talent Mindset HR is responsible for people management. All managers – starting with the CEO – are accountable for strengthening their talent pool. Employee Value Proposition We provide good pay and benefits. We shape our company, even our strategy, to appeal to talented people. Recruiting Recruiting is like purchasing. Recruiting is like marketing. Growing Leaders We think development happens in training programs. We fuel development through stretch jobs, coaching, and mentoring. Differentiation We treat everyone the same, and like to think that everyone is equally capable. We affirm all our people, but invest differentially in our A, B, and C player So you are in a safe position as long as you have a process to recognize and reward the “A” grade people, attract, train and upgrade the “B” grade people and most importantly, identify and get rid of “C” grade employees. Why getting rid of “C” grade people is important? There are a lot of reasons why you should get rid of poor performers: 1. You stand for what you tolerate. If you tolerate incompetence then you and your organization stands for it. 2. There is lot of effort required in converting “C” graders to “B” grade. At the same time remember that your “A” graders and “B” graders are spending their time on “C” graders. It’s like throwing an olympic swimmer into a pool with weights tied to his waist and then expecting him to win the race. I firmly believe that the results will be much better if a “A” grade employee spends time on “B” grade than on “C” grade. How to avoid hiring “C” graders? I think “C” graders are terrible at recruiting. If you believe, that a person is below average (either within the organization or amongst peers) then that worst thing that you can do is let them hire other employees. So, you should only allow your best and brightest people to select future employees of the organization. Remember, no one can hire someone better than himself. So, while “A” graders will hire “B” graders, “B” and “C” graders will hire even more “C” graders. Let’s begin the new year by cleaning up some deadwood. Shall we!?