Author: sumeet310

For Small & Medium Businesses (SMEs/SMBs) (or for that matter, Startups) that have more than 1 founder, professional and personal relationships between the founders, can greatly influence a host of HR operations, as well as a variety of organizational outcomes including business growth, profitability and sustainability. And if the founders have their immediate family members as well as relatives too, taking up various roles in the business, the founders and their families can, at times, make it harder for the organization to grow sustainably and more importantly, attract and retain talented professionals, in the long run.

CAN HR PUNCH ABOVE ITS PAY GRADE?

Interestingly, since SME/SMB founders are least likely to hire HR folks, especially when they set up a business, or even think of having an HR team as they scale up, issues between the founders and their families who play an active role in the business, tend to proliferate. Also, even when HR Professionals are hired, they may not be sufficiently empowered to look at founder-level issues or try and resolve board-room issues.

In one organization, that this author worked with, all 4 Directors were related to each other – while two of them were related by marriage, the other two were a father-son pair. As the business grew several fold, their HR woes multiplied exponentially. Apparently, the day-to-day administration of the organization, including the HR piece, was left to one of the Directors, who worked closely with an HR Head. Given that this Director had a highly technical background and also higher exposure to administration matters in an academic institution, when working as an employee formerly, the founders had collectively decided to put him in charge. However, as employee issues spiraled out of control, it became necessary to bring in an external consultant to address HR and employee issues. Also, other Directors stepped in to challenge and overturn some of the decisions that had been taken.

Oddly, what this situation brings out clearly is that, despite having an experienced HR Head and an HR Team, the Directors did not find it best to rely on their advice and counsel. As a matter of fact, based on similar experience with other SMEs/SMBs, this author is of the opinion that founders may be reluctant to rope in internal HR to take up issues that plague them, because they:

• Don’t trust internal HR enough
• Doubt HR’s competence and experience to address Board-level issues
• Fear other employees may come to know about what goes on at the top
• Feel HR’s role should not be extended to cover founder issues
• Believe HR is also part of the problem

I RECRUIT THEREFORE I AM (HR)

For most SMBs and Start-ups (let’s call them SMBs on Boosters), the sine a qua non for HR’s existence is its ability to recruit. So, it’s all too common for many SMB/SME and even Startup founders to offer deceptive titles like “HR-Head” or “Director-HR” or what have you to HR Professionals and then corral them in the recruitment war room. As an “outsourced” HR Head, this author had a similar experience with one Founder, who spoke eloquently about the “strategic” role that HR plays in his organization but made it a point to narrow the function and the role to a purely recruitment-oriented and employee administration focused one. While HR Professionals may not mind a purely recruitment role, since it’s perhaps a critical business partnering role, this over-focus on ensuring the right people are on board, comes at a cost.

For instance, this Director that the author worked with, had a habit of creating a highly ambiguous Job Description and clarifying a certain set of Compensation & Benefits (C&B) terms, that defied market realities. Based on conversations with Candidates who were shortlisted, the Director would proceed to make changes to the original, at times, all in the course of one day. Apparently, this permanent beta stage version of the Job Description, confused many Candidates.

Eventually, it was pointed out to the Director that the organization should spend some time and effort to create a Role Directory first (in line with Organizational Strategy, of course), that would clarify to folks internally as well as externally, what anyone was expected to do in a particular Role and what would be a decent or fair set of C&B terms for the same. The Recruitment piece could then follow the Directory and when required, amend the Directory, based on market conditions.

Ironically, while this kind of Role Clarification may still work well for employees, Director-level Roles are rarely ever a part of such a Role Directory. One Startup Founder, that this author spoke to said, that he and his Co-Founder had a clear picture (not on paper, of course) of how their 3^rd Partner, whom they wanted to bring on board exclusively to focus on Marketing & Sales, would look and sound like. Accordingly, they set out to recruit this 3^rd Partner themselves, and found him at a party. It was love at first sight or hind sight and probably, worked out well, for the firm.

ROL(E), CAMERA, ACTION

As is likely to be the case with many SME/SMB and Startup founders who want to grow exponentially, there is hardly any time to clarify their own Roles and required Skills, when there is so much action to be taken care of. Oddly, even when they patch together some Role and Skill requirements, for the employees who join them, the usual complaint from the employees is: my role is to do just about everything, just like the founders!

In one SME that had engaged this author, there were widely different “perceptions” among the 3 founders, with regard to each founder’s competence to handle their current role, the skills required for the role and their expected performance. All of them confessed that they barely got the time to “reflect” on “their” Roles, or Skills or Performance and that most of the time, their focus (almost camera-like) was on  finding out how their employees were performing and whether the employees were in the right roles or had the right skills.

GETTING ON BOARD

In most cases, founders assume all HR Roles and Responsibilities, when they launch their ship. It is only when they grow that they may wish to have a dedicated person or function. While this is great, founders may at times, forget that they need to also have an “HR” to handle various issues at their level. These include, apart from several others, their:

• Specific Roles & Responsibilities
• Reporting Relationships
• Role-specific Skills
• Motivation & Engagement
• Entry
• Exit

Now founders can trust each other to take up, any or each of the above areas. But that can be an uphill task, as founders rarely find the time to rise above their business or operations. At the same time, leaving these critical issues unattended can be detrimental for business growth and sustainability, in the long run.

January 2024 has come as a surpise for TCS, thank to the media spotlight on – well – as the charges go “forcing” more than 2000 of its employees to relocate. While about 300 from among the 1000s affected have formally complained to the NITES – (India’s largest Union for employees in the IT Industry), which in turn has forwarded their grievance to the Labor Ministry, the case does raise alarm bells for other IT companies that may be harboring similar issues. For an organization that rakes in about US $27.9 billion a year, thanks to more than 614,000 employees, this run in with employees and now, one state government’s Labor Department (which has sent TCS a notice), is not new.

Back in 2015, TCS was in the news for planning to terminate – allegedly, over 25000 employees, for poor performance. As the axe began to fall on some employees, a few took social media by storm – 1 ex-employee went so far as to record an alleged conversation between her and apparently, someone from TCS’s HR team to demonstrate how she was subjected to “the most unkindest cut of all” (Shakespeare). As to how TCS managed to carry such a large pool of “non-performers” for so many years, is a matter fit for another post. Anyways, while one court looked at this matter adversely and halted the retrenchment of 1 of the employees in 2014, on the grounds that her white collar job does fall under “Workman” category of jobs and is not “Managerial” or “Supervisory” in nature, thereby enlarging the scope and applicability of the Industrial Disputes Act 1947, another court asked TCS to reinstate an employee after 7 years, on similar grounds. As a matter of fact, it was another Union formed by employees working in various IT companies – FITE, that ensured the employee could make over a 100 visits to the court in 7 years, as he did not have the means to fight the IT giant in court, all alone. As these 2 cases are 8 years apart, it seems that TCS’ lawyers did not learn from their 2014 brush with the courts and ended up repeating the same error in 2022! For sure, History does repeat itself, but if HR is good at Knowledge Management or in this case, Case Management, it may not repeat that often, perhaps.

The increase in union activity in a sector that generates over US $227 billion in revenue, employs over 5 million and clocks an impressive growth rate of about 8.4% annually, and which has conventionally been viewed as a touchstone for progressive HR practices, has definitely raised many eyebrows. As per one analyst, who definitely views these developments as a sign of increasing political interference, unions are bad for the sector and that vested interests from outside the sector are at work! For sure this analyst has the industry’s best interest in mind but conspiracy theories apart, more and more employees in the technology sector, globally, seem to be banding together, at times, with or without political and governmental support. For example various unions representing Google employees worldwide, have now formed one umbrella union – Alpha Global, after joining hands with UNI Global Union – a Switzerland-based federation of unions that boasts a membership base of over 20 million workers, across 150 countries. More than 3 million of these workers are part of the ICT sector. As a matter of fact, its not just tech workers in developing countries who are looking to associate. Across the developed world in countries like Germany, UK, France, Ireland, and the United States, tech sector focused unions have been popping up, especially over the last decade.

As some of the bellwether IT companies in India brace for a slowdown, and push themselves to meet their targets, HR may find itself not just in the Management’s crosshairs but also in some Union’s crosshairs. Oddly, downsizing or to put it euphemistically, right-sizing, is not the only headache for HR. Post Covid19, IT companies have been on the offensive pushing employees back into offices that they deserted or asking them to move to newer locations. Now, truth be told, when Covid19 struck, many companies swore that their employees would never have to return to a physical office again. TCS, for example, went so far as to announce a 25 by 25 Work From Home Model – meaning, that by 2025, only 25% of its employees would have to work from an office. With the pandemic beating a retreat of sorts now, many such ambitious projections appear to have bitten the dust. Apparently, TCS alone has hired more than a 100,000 employees since 2020 – some of whom may have fallen for the 25 by 25 slogan.

Anyways, with the political season heating up (it being election year and all), any negative publicity that paints Management in poor light, is likely to attract political parties, who may wish to out-compete each other to ensure employee grievances are quickly addressed in the employee’s favor. Moreover, given that the IT industry does not have a legacy of working with unions or handling protracted litigation, the courts and unions, should be treated as competency enhancers, ushering in much needed improvement in not just HR practices but also arbitration mechanisms. Additionally, IT companies can also learn a lot here from their manufacturing peers, especially those who have distinguished themselves in working collaboratively, and not combatively, with employees, their Unions – of the political and non-political variety, various governmental intermediaries and the courts.

The experience of performance management for most employees continues to be an annual affair featuring forms, raters, and ratings, even as businesses continue to report their performance in terms of quarterly results. This session will help attendees to appreciate alternate industry practices that show how shrinking the annual performance management cycle to a quarterly cycle can not only help align employee performance with business performance but also make performance appraisals more transparent and engaging.