HR Challenges in Senior Management Exits

Friends,

This issue needs immediate attention of HR Managers. How do we deal with Senior Management separations happening at regular intervals.

Management comprises of eminent experts who play a key role in companies growth and thereby contribute significantly enhancing both business prospects as well as higher profitability. What happens if there are high profile exits of a Software 'services companies ? Can the management sit back and relax showing total indifference to the separations.

We could see the event turning out to be a dampener to the overall morale and productivity. Employees working under these leaders tend to become demotivated and there will be total lack of direction to move forward in both business development and project deliverables. HR plays a crucial role in analyzing as well as coming out with a quick action plan to back fill these positions or better still move people within the organization to fill the void left by these Senior level exits.

From business perspective the following are the implications of high profile exits

1. Customer Dissatisfaction :

For any of the roles where these Managers are SPOCs or Account / Delivery Managers the customers are bound to make it an issue and in most cases pressurize the management to ensure continuity and also minimize the risks by having either present incumbent to continue or have a quick replacements done to ensure continuity and smoother operations.

2. Shadow Impact

In most Software Development Companies the bonding between the Leader and Managers are quite strong. More so in case where employees who are quitting after spending substantial period in excess of 15-20 years in the same company. They develop a strong bonding and any separation will definitely have a rub off effect. Sooner than later we could see few more leaving the company and following their leaders in a new set up.

3. Continuity

Unless properly planned there is likely to be disruption in the service offerings due to the absence of senior management staff. HR has to grapple with this and try to have well thought out plan to ensure that there is a business continuity. Companies will discuss withe clients how they are going to deal with separations and discuss in detail action items for implementation to avoid disruption.

4. Transition

It becomes very critical for the companies to ensure that the deliverables are not impacted by the high profile exits, Since in most cases there is a window of 3 months from the date of communication of quitting and actual relieving , it becomes imperative that the new incumbent has to come to speed and fill the void created due to the resignations.

Let us evaluate what HR should be pro actively doing in these kind of scenario where the companies are witnessing high level attrition

1. Succession Planning

Preparing a list of possible candidates who can be either promoted internally or moved from within the company, Succession Planning plays a key role in withstanding any kind of shocks of quits from top jobs / positions. Being an ongoing continuous process SP can throw up interesting alternatives within a company paving way for smoother transitions.

2. Quick Back Filling -

Easier said than done. The recruitment cycle extends to minimum period of 4-6 months to select, induct a new incumbent. The hiring at senior levels is a time consuming process as there are very few candidates who match the job profile besides looking for a cultural fit

3. Team Morale

The team morale needs to be kept high and it should absorb any kind of shocks as a result of separations at the top level. Keeping the team in confidence in decision making helps in having sense of belonging and to a large extent helps in having higher morale.

4. Communication Management

Official communication management plays a key role at a time when the entire world and all stake holders - investors, employees and customers alike keep asking about these separations. A clearly worded statement from the top CEO as to the contributions made by the employees who are quitting and also reasons for separation (wherever possible) and a clearly defined future plans to meet the gap should be communicated in public. This goes a long way in better understanding of the situation and keeping the stake holders informed is key to their continued support in difficult times.

5. Expectations Management

As a leading survey most people quit a reasonably senior position only after they think through and often painful separation. Period reviews besides annual appraisals are opportunities which Management uses to gauge thinking of Senior Directors, keeping their career aspirations and mapping to companies growth and making efforts to keep them engaged are essential to curb attrition. An effort is always made to ensure that exits do not happen at regular intervals.

6. Exit Analysis

Through this exercise HR and Management will try to know the real cause for the separation. This happens once the employee made up his / her mind to quit. An independent and transparent discussions will help analyse root cause of un happiness. Follow up actions should follow to ensure that these exits are stopped to maximum extent possible.

This reminds me of a words of poet Alfred Tennyson wrote in "The Brooks" - "For Men may come men may go but I go on forever".

HR and Senior Management should not be seen as being indifferent and act as if they are not bothered and taking this in a casual manner will be disastrous as this kind of thinking will spread more unhappiness and lead to more and more separations at all levels - Senior Management, Middle Management and all. A right step at right time is bound to have a major impact and we all should be ready to face this challenge at all times.

Raghav HR Guru

Founder - HRinIndia

Succession Planning in Indian IT Companies

The abrupt change in leadership in Wipro in January and the public rumblings by one of the ex-directors of Infosys about the way the company was going forward with the selection of its new CEO in April have suddenly brought into limelight the issue of succession planning in Indian IT companies.

The not-so-exemplary leadership changes within a span of few months in two of the top three IT firms in India have not exactly created a great impression about the management depth and maturity in these companies.

A few other examples of the past, such as that of WNS Global Services, one of the top BPO companies, which took more than a year to name a successor when its founder director announced his resignation, have strengthened this perception.

Coming ability of this sector to create value in the long term.

Research by Dataquest shows that this perception is not exactly based on fact. Among the larger Indian IT companies, more firms have had a well-planned succession strategy than those who did not have such a plan.

They include India's largest IT company, TCS, which saw a leadership change in 2009; Cognizant, which had had that transition in 2007; and HCL Technologies, where the leadership baton passed to a new CEO in 2007.

All these three are among the top five offshoring companies from India. In the BPO segment too, Genpact and EXL, two of the largest BPO firms, had had a good succession planning in place while HCL Infosystems, the largest Indian company focussed on the home market, too has had a well-executed transition.

Based on the examples of these companies, here are a few trends that we have noticed in the good succession plans:

The planning happens at least three years before transition. In all these cases, except HCL Infosystems, the faces of successors were projected internally and externally well before the actual transition.

In HCL Infosystems, while the name was not known, it was pretty clear internally that someone from outside and much younger was taking over. So, there was no surprise for employees, customers and investors.

Usually, there is a generational shift. In all these succession plans, there is a minimum age difference of 10 years. In one case, it is 21 years.

That is clearly the next generation in an industry which is not more than 30 years old. This is an acknowledgment of two things: one, the business rules change over a period of time and a fresher approach is always better and two, any new CEO should have enough time to carry out his plans and ideas.

Usually, the new leader has to have deep understanding of the core business, whether insider or outsider. While the shifts may be generational, and it is a good idea to get a fresh approach, a lack of understanding of what is the most important thing in the business may create problems.

So, for most offshore companies, it is both an understanding of the front-end as well as the delivery. Understanding of customers may come from an outsider but understanding of delivery would come from someone who has spent time internally.

In all our examples concerning offshore companies, it is internal people who have been promoted to the top job. HCL Infosystems, which has most of its people in the front-end, decided to go for an outsider who has good understanding of the customer.

Source ET

Raghav

Founder

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Succession Planning - Are Indian Companies Ready ??

The tallest leader from the Tata Group for him is Jamsetji Tata. "JRD Tata is a legend, but the one who fascinates me is Jamsetji. His combination of influences, ideas and philosophies that he brought together and then made them work in practical terms, coupled with sheer single-minded commitment to India, at a time when the idea of India itself was emerging, is indeed special." In his recent work, TATA The Evolution of a Corporate brand, Morgen Witzel, senior consultant with the Winthrop Group of Business Historians, unfolds the story of the Tata brand in 200-plus pages. Witzel tells Sarika Malhotra, as the group is expanding its global footprint, it is the very high level of self awareness in the group that is making all the difference. "The group is aware of the challenges it faces very strongly. Throughout its history it believed in actions rather than words." From a branding perspective, even as the Nano has done the Tata brand a whole deal of good in terms of exposing it to the world and making them aware of it, however, the key challenge Witzel points out is to get the Tata brand in the open and make the transition form an Indian brand to a global brand, "that purely in branding terms is a task of the next ten years". Excerpts:

What makes for Tata's success as a brand?

Every big successful business chooses its own way to success. What made the Tata brand so successful is that the fact that they started off with a very strong set of values which were embedded in the group from the very beginning right from the time when Empress Mills was founded by Jamsetji Tata. And which the group stayed very much true to, down to the decade that followed. Strong brands are always built on strong values, principles and ethos and then communicating and sharing them with stakeholders. The Tata group has been really successful in doing that over a long period of time, consistently well. And that also has to do with consistency of leadership only five chairmen over a period of 140 years.

Succession is a very important issue at the moment and the big question is what after Ratan Tata?

Well, it's a great story and it's going to run and run. And my suspicion is that this decision is not going to be made that quickly. Having said that, one is sure that continuity of leadership is going to be a very crucial factor. When you look at other successful brands around the world, you see that the time of change in leadership is very often the time when companies have to track the value of the brand very carefully. For the Tata brand to continue to be successful and strong, it will need a leader who can carry on those values. Any succession is difficult at anytime for a large company, especially if you have had a long lasting and successful and dynamic leader at the helm. Look at the succession of GE when Jeffrey Immelt took over from Jack Welch, that was a thing that people discussed endlessly.

Any takeaways for the new leader?

It is very interesting to look back at the Tata Groups's history and learn from there. What were the challenges that Dorabji Tata faced when he took over from Jamsetji? Did he continue on the projects that had begun like the Taj and Tata Steel (TATASTL.BO : 531.2 0) and bring them forward and make sure that all the hard work that went into building these went on? JRD, in turn, had to build on that foundation at a time when the group was getting diversified and it was coupled with the challenges of independence and involved adapting to a new business environment. Go back and look at how JRD responded to that. Another sea change was with economic liberalisation, which coincides with JRD stepping down; how did Ratan Tata respond to that. Look back at the past leaders, how they responded and take lessons from that. It's often said the first thing a business leader should do after taking over office is to start looking for a successor. The one thing that distinguishes long-lasting business is the ability to locate in a timely manner a good successor ready for office. And GE is a pretty good example of that. GE down through the decades has had a succession of very powerful and dynamic leaders who were brought in the process early.

You mention how Tata's Corus acquisition of 2007 confirmed Tata Group's global aspirations and that it was strong enough to compete with global giants and how the Indian media led the way by creating stories about Tata's global ambitions and helping create a perception of Tata as a global player, a perception that is a bit over exaggerated at the moment. What made you say this?

In recent years, Tatas have expanded overseas, now at least 60% of their income comes from outside of India. They are much more involved in international business than they were ten years ago. Some of the press I was reading a year ago suggested that Tata is now widely recognised as a global business. But I am sorry to say it isn't. It's on the road to being a global business. In fact, there are very few truly global businesses. Coca-Cola, IBM, P&G, Microsoft only a dozen can claim to be truly global. Most businesses are working towards it. Tata is on its way to becoming a global business, but it isn't there yet. I also reckon that the India press on the whole exaggerates the awareness of the Tata brand overseas, which is very patchy outside. There will be people on the Tata Consultancy (TCS.NS : 864.7 -13.15) street not knowing they are using Tata Consultancy because they will be using them as clients or competitors. But if you ask them, what do you know about Tata group, the brand, do you know that a majority of Tata Sons is owned by a charitable trust? Most of them would not. They don't know what the values, history and traditions are. Same in the steel industry, same in the chemicals industry they know their bit of Tata but they don't know the whole culture. But when that changes, you will see Tata make the transition from being an Indian to a global company with Indian roots.

You point out that in the late 1980s the group was disintegrating and was marked by factionalism. How did the turnaround happen for the group?

A decision that Ratan Tata took initially was that the group needed to be not centrally controlled, but to be more united. And the brand was absolutely crucial in this. One of the key things he said regarding a corporate brand is about uniting the group and not about controlling the group and making sure that people share the same values. And that was a pivotal moment that brought the group back to its heart and beginnings and that I believe laid the foundation for the growth of the group ever since.

So do you credit Ratan Tata for the brand image the group has acquired?

Among others, yes. Prior to the 1990s, Tata made no attempt to develop a corporate brand. Ratan Tata had said, "We had a reputation, but we did not have a brand." I think it was his insight and his commitment to the idea that made it happen. As a leader he led the way in brand building through various exercises. His commitment to quality and innovation reinforced the brand and he emerged as the champion of these. And this has been one of his most significant achievements in many ways to get the message to the heart of the Tata group.

Like other global leaders, during his recent visit to India, David Cameron also visited Infosys (INFOSYS.BO : 2864.05 0). Given the rising trend, how do you position a relatively younger company like Infosys vis- -vis the Tata group?

Outside of India, Infosys stands for a lot of things that India stands for today. Western people think of India as a place of very high calibre and quality in IT and software solutions. Infosys in brand terms has been a world leader for a long time in this sphere. Infosys, TCS and Wipro (WIPRO.NS : 432.95 +1.75) have gone up from India and made a name. I remember a report three years ago from a big international management consultancy which said that India is very good at soft skills and software management, but India is very bad at heavy industry, whereas China is very good at heavy industry but not very good at research and development. Which is just not the case. China spends more on R&D per head of population than the US does. In India, the Tata and Birla group are very good at every industry and are very innovative. But perception is everything. And the perception in the West is that India is not good at heavy industry. Tata brand has been able to make an impact outside India with TCS. Tata Motors (TATAMOTORS.BO : 894.35 +33.5), Tata Steel and the likes have been relatively less known outside India because of the perception that India only does software good. Everything about brands is about perceptions. The brand is the sum of perceptions that everyone has about it it's the experiences people have of products and services, it's the stories people tell each other about them. And brand India today is just associated with IT and outsourcing, but nobody knows yet just what India can do in building cars, watches and engineering and mechanical things.

You refer to the Tata group as being 'good and great', indeed a special combination that carries immense expectations. Any lessons that other corporate houses can learn from the group?

Every great brand is unique in its own way. The key things to learn are absolutely delivering on your promises day in and day out. As Ratan Tata says, 'If you fail to do what you promise, then everything gets thrown away. Your words then have no meaning to anyone.' The other thing is to recognise that business are not their just to serve shareholders and customers. They are there to serve the customers, employees, shareholders, suppliers and the community at large. And you ask any expert on branding and they will tell you exactly the same thing. You have to build a 360-degree view and balance the needs of everyone. Yes, it's a huge expectation to live up to. But such expectation is placed on every great brand. Apple, Toyota, Nokia live with this. And Toyota last year struggled when it appeared that it was not living up to its customers' expectations. So it's for every brand to keep living up to its customer's expectations. Find out what your customers want, deliver it to them day after day, month after month and year after year and in the process exceed their expectations. And that's the secret of good branding. It sounds pretty simple, but it's actually very hard to execute consistently over time.

You interestingly refer to an instance when other Indian groups were making mansions, the Tata group was building a cancer institute. Lesson in brand building here?

Again, it's about perceptions. These two developments were reported in the press almost together. It's very obvious when people think about the Tata's they think of one thing and when they think about other business houses, they think of other things, simply because that's what's being reported and talked about. So it could be a matter of how you manage your image, what stories go in the press, but it's also a question of your actions. I am not passing any judgments either way, how people spend their money is up to them. But it's a matter of the image you present to the world at large and the images are different in the two cases. And that in the long run go towards the perception of making a brand.