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Neha Kapoor

IT professionals were encouraged to think of themselves as something special. So, loyalty factor and identification with the company became secondary.

Mr Alan Parker, Principal, Hewitt Associates.

MUMBAI, Feb. 8

THE slowdown has propelled IT companies across the world to review and reposition their stand on one of the most important factors for their business - people.

To get a perspective of how things stand and where they are headed, Business Line spoke to Mr Alan Parker, Principal, Hewitt Associates, on the effect of the slowdown on employees and HR practices in the IT industry.

Excerpts:

A lot has been said about how the slowdown has changed employer expectations. How have employee expectations changed?

Employee expectations have changed more in the IT industry than in any other sector. IT professionals were cultivated as a special breed who should expect to be given lots and lots of money, perks, options and so on. This was the driver for them employees moved over to the next organisation that came around with a big sign-on bonus, a bit more of pay premium. It was what that drove many people to dotcoms thinking that joining a start-up would make them very wealthy.

To a certain extent, companies created this situation themselves. I think what's going to happen now is that not only will companies sit back and think, but individual professionals too will reflect, realising that in the end this is not in their best interest either. So both sides will come to an awareness that while (monetary) rewards will remain important, people have to be paid properly for what they contribute. And, there are other factors that are more important than giving people a few extra dollars.

What are these factors?

The thing that will attract people, assuming you've neutralised the rewards, is the nature of organisation. Some of these people will look for more security, some future longevity in the organisation. They will start to think also about - what about me in this organisation? Will I get to do what I enjoy, continue to grow and learn?

They will also think about whether the organisation will give them respect and whether they will be able to respect people around them. Most organisations will create an internal brand/promise around those things and then deliver on them.

At the height of the IT boom, Employee Stock Options (ESOPs) were the most attractive rewards. How does a company deal with employee discontent generated on account of the considerable devaluation of IT stocks?

Unfortunately there are some things you cannot do in retrospect. Companies can try and say to people that ESOPs at that time were a great idea; these things happen and we can the weather storm together. Frankly, the time to deal with ESOPs and their efficiency is before, and not after all this has happened.

As far as discontent is concerned, the horse has already bolted, but hopefully it won't happen in the future.

There was nothing wrong with ESOPs but with the way they were sold and the lack of education around them. They were given out like a pot of gold. ESOPs have an important place, but companies need to position them and sell them properly, educating the potential recipients. There are other incentives that can be used as alternatives to ESOPs. For example, phantom ESOPs or even straight forward cash incentives, but with a long-term emphasis of say over a three-year period. Whatever the alternatives, they should all be performance-linked.

You earlier spoke about the special treatment given to IT professionals including perks. Have companies withdrawn most of these now?

It is not always easy to take away things that you've given to people. In some cases, they have been taken away when companies are forced to downsize. But, by and large, there has been and will be a gradual phasing-out. What you'll find is that less will be given in the future.

Will the pressure on shortage of talent and pay return with an upswing?

The pressure on shortage of people will definitely return. I'd like to think that pressure on pay will not. If organisations really want to get their act together, they will understand that they need to create an environment which people want to belong to. In which case, as long as you pay and recognise performance fairly and equitably, it will not have to be as grandiose as it was earlier.

And, how would a company achieve equity in pay and recognition of performance?

There are two kinds of equities - internal and external. So far there has been a lot of focus on the external equity, where you focus on paying people on par with the market, and rightly so to some extent.

But interestingly enough when it comes to employee engagement, internal equity is, in fact, sometimes a negative factor in the minds of employees. For example an employee may think: "I'm doing my best, breaking my back for the organisation and there is this person here who just saunters in and out, and is being rewarded as well as I am." That is internal inequity.

So, internal equity is when employees believe that the reward is being paid fairly for their contribution relative to other people around. If the organisation wants to set a culture around fairness and recognition of performance, then internal equity is important.

What would you advise Indian software professionals to look for in a job ?

Having already reached a high level of skills and capability, Indian professionals now need look at personal values and consider what will work for them in that context. They need to do considerable research to find an organisation that reflects their values and gives them an opportunity over, say, the next 5-6 years to carve out a distinct career path.

A few years ago, Gartner released a report saying that the Indian IT worker is less loyal to the company and more of an individual worker. Comments.

In my opinion that has been the case everywhere and is not specific to Indians alone. The reason for this is that IT professionals were encouraged to think of themselves as something special. So, loyalty factor and identification with the company became secondary.

You have to realise that in IT there is a wide spectrum of people in terms of what they contribute and there will always be people at the end of the spectrum who are so engrossed in the technology they are developing that will always be their identity in front of any employer. These are the people that companies may now prefer to work with on a contract basis.

But, for the in-house professionals, they will work towards making them believe that they are a part of the company.

What has been the biggest challenge for HR professionals in the IT industry over the past year ? And, what will it be in 2002 ?

The biggest challenge for HR professionals was helping their business leaders not to panic; to counsel them on what was going to help the workforce stay on, stay committed and move forward.

Interestingly enough, a recently released study of best performing companies in Australia reveals that the top three or five companies have been those that laid-off people over the past 12 months. Yet, they were rated as the top companies to work for by their own employees. So again, it's not what you do (lay-offs), but how you do it.

Going forward, the biggest challenge will be how do we use this opportunity to retune and reposition our promise to our employees and maintain our internal branding so as to retain the bright people we want.

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