Open Letter to the CEO of the Services Industry

Dear Mr /Ms Chief Executive Officer,

Let me congratulate you on the growth figures that you have been achieving quarter after quarter, across the sector (be it financial services , IT Services , BPO , KPO…etc ) . I have been a bystander in your growth plans and have seen you treat me primarily as a recruitment engine or at best a person who can manage attrition .You have classified me as another support function ...(though not a part of your business think tank), you have made a choice to marginalize me in your strategy formulation and implementation processes, in many cases I have not found a position in your Board of Directors. I have seen myself as a victim of the situation and played a marginalized role that was carved out for me .

This letter is not a commentary on what has not happened, or could have happened and did not happen ...blah blah......but from now on, I want to take charge of the situation and make you sit up and take notice of what I have to offer. For a moment forget that I belong to a discipline called Human Resources, and reflect on what is the most important item of your operating expenses!!, even for me it’s a no-brainer , its people costs , isn’t it ?? (The wage bill, the cost of managing attrition, the cost of hiring all put together). So what do you want to do with this line item of your operating costs , don’t you want to derive maximum value out of it , don’t you want to ensure that these costs are under control , so that your bottom line does not get adversely impacted…..so will it be wrong to say that I, (your incompetent HR man ) actually manage your supply chain ….sounds silly doesn’t it …suspend your judgment for a while and read the following paragraph ...

Think of a classical supply chain – (even at the risk of oversimplification, a Supply Chain process would broadly constitute inbound and outbound logistics), what is a supply chain in your industry? – people of course. Like your peer in the manufacturing sector wouldn’t you like optimize your sourcing costs and also make your outbound logistics more efficient …I am sure you would agree emphatically …..In this context let me reposition myself as your Supply Chain Manager. I could play around with your hiring patterns to ensure that I get the work done at a lower price point (ex- For a KPO I can hire brilliant college grads at a cheaper rate and with some help of technology can ensure that they do the same work that those guys from the biz schools do, at a cheaper cost to you…sounds interesting?). I could align the rewards program and incentivize hi-performers differentially, thereby directly adding to your margins –the appraisal forms that you and your managers loathe is a business process tool to ensure that we reward the right people for the right behaviors (competencies), I could help your underperformers to be more productive, thereby reducing the cost of your “slow moving inventory”. I could ensure that the workforce is engaged by designing retention schemes so that “there is no loss in transit” of your goods …..I am sure you will find value in what I have to offer – would you please help me to help you!!

Lets meet and discuss in details the exciting possibilities that both of us can create

Yours truly,

The People Supply Chain Manager

Talent Trap-The Cost of Development ?

Yesterday after work, I had logged into my system and had a G Talk conversation with a former colleague of mine (Mr J), who is a very senior manager in the manufacturing sector. He quit his job a couple of years ago and took up an international assignment. In the next paragraph, I am replaying the conversation without getting into the exchange of pleasantries and trivia which approximately took approximately five minutes
……
Mr J:……….. you know my nephew ….the young chap you met when you came to my home ……has decided not to pursue higher education

I was quite surprised , I had spend a couple of hours with this kid (J’s nephew…) and the entire conversation was about his studies and how he wants to set himself up for success by pursuing a good degree and thereafter an MBA from a top tier school …….


Me: What happened to him? …he was supposed to do a MBA …….why did he quit….

Mr J: God only knows, he has joined a KPO and is getting paid well…he tells me that’s where the future lies and not in traditional education …….. his peers from college have joined the same place …this company came to campus and …….that’s that

Me: You mean bright kids now opt for a career in KPO’s and then don’t want to pursue higher education …

After the conversation I called up some HR Managers and recruiters in the KPO business, and to my surprise they confirmed that they have started picking up smart college graduates to work for them as Junior Analysts , according to these people it made good sense to get the number crunching done by lower cost resources and hence this shift in the recruitment pattern . It sounded very logical to me, however I quizzed them on career management plans for these young people. As I would have expected , HR was too busy in hiring and on boarding them and had no time to think about career management….This was exactly the genesis of this post ….the unintended consequences of development.

As a country we are in the midst of a transformation ,shedding our image as a backward, centrally controlled economy to a nation with one of the best talent pools with a very favorable demographic profile (Nearly 60 per cent of our population between the ages 15-59, and more than half below the age of 25. In contrast, countries including the US, Europe, Japan and China have a more aged population with dependency ratios likely to increase over the same period) ……but are we slowly and surely getting caught into what I call a “talent trap”…..

The Talent Trap

The Talent Trap is a situation wherein the best of our college grads get attracted to KPO jobs and do not pursue higher education…which creates a fundamental void in the pipeline for managerial jobs. What could possibly happen in the next ten years, the attractiveness of the KPO industry as an employer would reduce (higher automation, process improvements, would gradually take away the knowledge component of these jobs and make it boring –like a BPO job) and therefore these bright kids of today (in absence of proper career planning by their employers …which I suspect is what is going to happen) will land themselves in a situation where their employability would reduce. As a consequence the nation would have lost a lot of bright young minds, and the young people would not have any meaningful careers to look forward to.

To put the talent trap phenomenan in context, I had posed this question to a global executive whom I met after three years in Mumbai this Sunday (11 March 2007). He recognized the issue and his response was that this happens in developed countries, there are lots of examples in the US where people choose not to go to Wharton or a Harvard and pursue a stress free career all their lives. I agree that this happens in the US, but the contexts are different:

a) India’s currency to development is its talent, and the right kind of talent doing the right kind of job. Which this essentially means is that the best of our brains should pursue higher education and contribute differentially than others in the process?,while I support the HR initiatives that NASSCOM is taking to improve the quality of the workforce for the classical BPO operations (NASSCOM Assessment of Competence (NAC),Certification Program for Frontline Management etc ..), these KPO hiring have a large impact on the competitiveness of the nation .

b) The context of US and India are a bit different. As a developed nation US can probably afford to have a percentage of its brightest college grads take up “easy” jobs, which is a choice that an informed individual is making in that county. However as far as India is concerned ,I am not too sure if the young kids are making an informed choice , they are attracted by the money , the fancy name that they work for , and the team parties that are thrown occasionally , for them it’s a good happening place to be…who cares for education anyways ….. are we converting the best talent into mediocre people by this process…!!!

c) It makes eminent sense for the businesses to hire such people (cost advantages …) in the short run, but it sucks away the cream of talent thereby depleting the managerial pipeline of the nation. I also recognize the fact that these venture funded KPO’s need to manage costs and show performance on a quarter on quarter basis , but in the long run it's going to land itself in a situation where it would have a workforce which is demotivated and expensive ( considering the hikes that are given in the sector..) hence the question that I would like to pose here is “does it really make business sense , in the long term to hire such resources ,though there are obvious gains in the short run…”

So where does all of this leave us , assuming that hiring bright minds for KPO jobs is a reality and the immediacy of financial pressures will make it difficult for the employers to recognize the long term ramifications of this hiring ….. the only solution lies in a structured process of Talent Development (not a fancy word , it's different from simply training ) , so that the careers and the abilities of these young people are not eroded over time ….what do you think ? , do write in …..

Teleworking and Management Beliefs in India

Consider the following:

a)Sun Microsystems reported a savings of USD 300 million during the past 3 years as a result of its iWork Program

b)Cisco Systems distributed work strategy reports a return on investment of 300% resulting from real estate savings and reduced employee turnover

c) IBM has nearly all of its employees working on telework basis , It reports an aggregate savings of USD 500 million a year in real estate , training and HR support costs

d)The county of Los Angeles reduced employee turnover by 25% for its telework population

Source-Gartner

These are early indicators of the fact that teleworking and distributed workforces are increasing becoming a trend in workforce management. This post of mine explores the possibility and implications of tele-working as a practice in India and also leaves the reader with some questions which s/he might want to explore

Before we go any further its important to understand the definition of teleworking. Telework as defined by the International Telework Advisory Council (ITAC) is “the ability to work anytime, anyplace, using remote access connectivity and mobile technology”

Teleworking –Implications for Indian organizations

As we have seen Teleworking makes eminent business sense, but the implementation of a teleworking program represents a fundamental change in the organization to the extent that employees are empowered to decide where and when they work. The shift of power over the individuals work mode from the management to the employee represents a major shift in management philosophy. The question to ask is whether Indian organizations recognize this change and have the ability to adapt and make the most of the opportunity that teleworking presents as a tool.

I spoke to a few colleagues about the concept of teleworking in their organizations and got a mixed response. The responses varied from rejection of the idea to some amount of acknowledgement of its possibilities, the common issues raised by these managers were as follows:

1) Loss of Supervisory control
2) Employee isolation and loss of company loyalty
3) Inability to work in teams –real-time
4) Logistics issues of coordinating a virtual workforce
5) Infrastructure issues

When I reflect on the issues raised by my colleagues, I am tempted to believe that most of us in India do have long-held beliefs about the supervisors role, company culture and employee trustworthiness, thus moving to a telework program maybe considered as high risk.

I was of the opinion that in India’s services sector the beliefs of the role of the supervisor would be fundamentally different from the manufacturing sector….I am not too sure of this any longer. My colleagues work in the services sector and their unstated belief is that a supervisor should be in control of the work products of his reports and its much more efficient to get “things done” when your reports are in physical proximity . This does not mean that teleworking is a non starter in India , companies like Infosys have some initiatives in this direction with remote access work locations for mothers ( however this is not teleworking , the way we would like to define it , but it’s a good start nevertheless..)

In Indian organizations where some form of teleworking is prevalent , it has the following characteristics :

a)Employees use personal computers or company laptops to work after office hours at home . Remote access card primarily support working after office hours and are not considered a primary work channel. Hence when these remote access cards are provided to the employee, its like giving him a tool to work “more after his stipulated working hours” and not to improve his productivity. I am not sure if this helps employee retention or morale…

b) Remote access devises is also used in the context of maintaining connectivity during travel. I used my data card during my Infosys days to keep in touch with my e-mail and service my customers ……

I believe that these manifestations have more fundamental causes (going far beyond the phenomenon of teleworking per se) which needs to be explored by all of us, I would leave the reader with the following questions to struggle with and while there may not be any right or wrong answers the solution to this could be in our collective struggle , and my questions are :

a) Do we really trust our employees?
b)Are we insecure as managers ?(do we need physical proximity to retain “control” over our teams)
c)Do we treat our employees the way we want to be treated ourselves?

HR in Startups (KPO's /BPO's/Consulting)–Some Reflections

In the last couple of years there has been quite an upswing of start up firms in India. In my circle of friends and former colleagues there are quite a few people who have left their cushy jobs and ventured out on their own to set up businesses in consulting , BPO and KPO spaces . The common thread that runs across all these businesses are that they are people centric and capitalize only on the intellectual prowess of their workforce .As you would expect that these start ups have their own HR organizations and have been able to attract competent HR professionals. However my firm belief is that People issues in these circumstances need to be viewed and managed fundamentally differently than in a mature set up

The objective of this post is to highlight some of the cornerstones of people management for start ups in the BPO/KPO or consulting space. People costs (salary, bonus, variable pay, espos etc) is the most significant operating cost for these organizations and hence the role of the HR Manager is needs to be somewhat similar to a Supply Chain manager . A HR Manager needs to build a strategy based on maximum value deliverance to the businesses for the people costs it incurs. This idea struck me when my school mate Judhajit Das Sr VP-HR of ICICI Prudential Life Insurance spoke about managing people costs in his organization in a lecture that he delivered to HR professionals. Reflecting on Jit's idea ,it became amply clear that HR is probably not doing justice to the business objectives that it ought to serve.

Subsequently I met a few HR Heads of such organizations and my suspicion became an initial hypothesis, it seems that we are managing HR as we would do in a normal and stable environment. We do the same old things, play around with the performance appraisal forms, write some training needs and then organize some training programs , get very busy during March-April for processing increments, promotions etc. Nothing wrong in any of these activities, but they are not the supply chain view of HR which I am trying to propagate. The supply chain view of HR in these cases would be an integrated set of systems and people processes which would feed into each other and derive maximum benefit from it , I am sure you will find this a bit abstract , but I will try and demystify the same .

My supply chain view of HR has the following set of assumptions

a) HR Processes are classified into two broad categories:

i.Operations – The set of processes which are need to be run efficiently at minimum costs , these processes are maintenance in nature and cannot be necessarily sharply co-related to business results (ex-payroll , benefits administration , some basic employee engagement processes, …)

ii.Developmental –these processes are ones which are critical to the supply chain and the quality and rigor of these processes determine the business value of HR . Developmental Hr processes are –performance management , talent identification , rewards strategy etc

An HR manager needs to quickly set the operations processes in place and then ensure that these are run optimally , once these processes are set up the HR Manager does not need to spend any more time or energy in these activities .


The Development processes need to be designed and implemented with a plan. My quick research shows that most HR managers do not have a clear plan or a framework of setting up these processes and hence their energy and focus gets diverted into multiple processes and therefore none of these are ever institutionalized. I don’t have ready answers or a framework as yet (thought I am working at one and people who are interested may contact me offline to discuss the same ) , but the following steps could act as a guideline

Before one gets into the design of such processes one needs to be very clear that each one of these need to stabilize before launching the other . In other words if the storage or warehousing systems are not great then its likely that the supply chain costs will go up due to pilferage and losses which will be difficult to make up even by efficient distribution systems


I would urge HR Managers to keep the following steps in mind (these are sequential in nature and I believe the maximum value is derived when the sequence is followed) while setting up developmental processes


a)Articulate the People Management Philosophy (How do we want to treat our people assets ? , do we reward for outcomes or efforts ? Do we reward innovation or are we happy with compliance ?…)

b)Define a recruitment strategy (where to get people from and how to get them at the most optimal cost )

c) Define the Performance Ethics and Philosophy

d) Design an appraisal methodology

e) Define the Rewards philosophy and the mechanics of performance differentiation
After establishing steps 1 and 2 , define competencies for the roles (both behavioral and functional)

f)Align the competency framework with career movements and progressions

g) Focus the Training plans on the competency framework and use a robust Instructional Design methodology to derive maximum benefit from training

Caution – These steps are incomplete and it is meant only for start ups in the first two years of its operations, the belief is that if these steps are followed in the way its recommended it creates a base from which the other processes can be build . This framework is not intended to be of any use to Hr Managers who operate in stable environments.