The Hindu Business Line : Fight ‘fear of recession’ first

How is the recession, the full effect of which may yet be coming, impacting our IT (information technology) companies? While a few big companies are suffering, some small players are managing quite well, observes A. Krishnan, Founder, Maximus People Solutions, Chennai.

Among the smaller companies, he finds a commonality: that they had some kind of a foresight and invested in long-term strategies and were better equipped to face the bad time. Regardless of the size, they saw what was coming ahead and/or were not complacent, adds Krishnan, during the course of a recent e-mail interaction with eWorld.

“Another commonality is they brought in a culture of innovation, high performance and competitiveness. Their business strategies were built on such culture. And hence they were better prepared. It is a choice organisations will have to make: Develop foresight, innovate and be a leader of the market you are in or end up as a reactive operator.”

Krishnan, a practising HR (human resource) professional, has worked on HR strategies and change management initiatives in companies such as BPL, Kirloskar Oil Engines, Foseco India, Mahindra & Mahindra and Nokia. He has also been a retainer consultant to Centre for Micro Finance (CMF), Chennai.

Excerpts from the interview:

What are the damage control measures that our big IT companies have to get busy with, from an HR/people perspective?

Fighting the ‘fear of recession’ is worse than fighting recession. For, fear causes confusion — amongst employees as well as the employers. Remember the rumour about an IT major cutting down salaries? The organisation later clarified that it was only adjusting for a drop in the variable pay earnings which was paid in advance.

So the first piece of advice is not to react in a way that can cause distrust and confusion. Cutting quickly the frills — such as the late-leavers drop facility, team-parties, outings and sometimes even the birthday cake, etc, — seem very common but may not help.

Please do not mistake me. I support lean practices but let us not be seen as resorting to knee-jerk reactions. If you have an overall ‘Lean-Drive’ and do it with employee involvement, they themselves will suggest very good ideas. But one-sided reactive actions can lead to losing employee confidence and add to cynicism.

Non-performance should be dealt with seriously. In good times, organisations tend to be generous. I have come across some companies suddenly starting to focus on ‘non-performance,’ when the going is not so good. They use the long-unused performance data for acting on non-performance, during recession.

The problem is unless you have a culture (read ‘institutionalised practice’) of promoting high performance and acting on non-performance, there is a danger of losing credibility. Remember, culture confusion can only have a bad effect on employee morale and business performance.

So what should you do? This could be the right time to invest to find out what brings value or what employees value. Is it the brand identity, job challenge, leadership or a sense of belonging? Discover and invest in the positives. During recession or bad times, attrition drops and it is time to use it to your advantage. So, whatever positive investments you make will create an amplified effect on the workforce which is more stable.

Also, good communication matters all the time and more so during bad times. Keep your communication channels open (to suggestions) and responsive (to queries).

This is the time for HR to get very innovative. Can we look at teams getting cross-training with internal trainers? How about investing in more team tasks, such as probably an office 5S? Most organisations keep collecting a list of important but not so urgent tasks. Pull that list out and bring it to the table! It is time to focus on value creation.

Are the woes of the small and medium IT enterprises different in this regard?

The effect could be different from one organisation to another but I do not believe it is the size that adds to or reduces the problem. I do not believe HR measures should be different either. But what matters is that the leaders in SMBs (small and medium businesses) have their own different styles.

They have an advantage of being there at the workplace to lead from the front. They should use it wisely to review (collectively with their people) strategies and measures that brought value to business. Improve focus on business measures. Let the employees know where they are heading and what would create value for the customer. This could be an opportunity to educate employees to focus on customer value if it has not already been done. Successful companies are already doing such things.

A medium-sized IT company’s CEO told me recently: “We have asked employees to spend 20 per cent of their time in any of the corporate development activities. To come forward in teams to suggest projects which will help develop the organisation.” He added, “The response has been very good — an employee team came forward to refurbish the company Web site and has been doing a good job.” This is applicable to bigger organisations as well but smaller companies can achieve far more easily due to the size.

Your counsel for those IT employees who suddenly find their pay-packets evaporating…

Tougher times ahead! Good performance matters a lot. You would also suddenly find a premium inside the company for those with better managerial and interpersonal or team skills. Selections and further progression will be based on such soft skills. Hence my suggestion is to focus on those skills which will propel you on the career ladder within the organisation.

And to the eager IT students graduating this year, and to those in colleges...

The recession effect is sector-based. For example, everyone agrees that sectors such as telecom, healthcare or insurance are not affected to the extent financial services were affected. Therefore students should seek an opportunity in those areas and focus on skills required for such industries.

Is this when our IT companies need to put in place key HR processes that were ignored during the good times?

The answer is yes. As I mentioned, this is the time for introspection, discovery and investment in positives. Focusing on culture development, employer branding, better linkage of strategy and employee goals, improving the quality of performance reviews, internal communication systems are all good examples.

Right metrics of employability in the IT sector, both products and services.

I may not be very qualified to comment on this. But most of the times the complaints I hear is that academics do not prepare students to be good team leaders and managers and hence there is a fair amount of focus on soft skills. Team playing, communication, project management, negotiation skills are some examples. Companies spend a lot of time and money in preparing the young workforce before they ‘go live’ and most of the training I understand is around these soft skills.

I also see another emerging trend. IT companies are trying to move up the value chain. As the saying goes, it is no longer back-office and front-office work but core development work, which is still with ‘head office,’ and which would fetch more margins and better profitability. This movement will demand specific technical expertise besides the generic soft skills.

As someone who worked in the hi-tech manufacturing sector, your insights on HR focus areas of immediate relevance.

Hi-tech manufacturing deals with very high demands on quality and also often changing product lines. Ramping up or down for a new model is quite frequent and a big challenge, too. With a larger portion of workforce being skilled, one has to continuously invest in preparing the workforce to deal with such challenges. Added to that is the continuous pressure on reducing the cost of manufacturing.

Focus areas for HR would be first to assist in developing a competitive workforce which is competent and has a flexible mindset to adapt to changing situations and demands. HR should also help in adopting world-class practices, competing with the best of the benchmarks. Facilitating to create a culture of excellence is important.

As India is new to this sector, investing in skill development within the organisation and outside is also important.

In India some of the best manufacturing practices happen in the auto sector. Hi-tech manufacturing needs to do better than that.

dmurali@thehindu.co.in

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