How NOT to manage a lakh plus employees

Infosys seems to have struck itself quite firmly on its right foot with its new HR policy. (see here). With its new iRace policy, Infosys has disgruntled a lot of lower level employees, the very resource base it has invested in the initial couple of years and who they should be seeking to consolidate in todays resurgent market conditions. The main grouse towards the initiative seems to be the unfair manner in which promotions and 'depromotions' are being carried out, along with the career development policies which the company has deployed in recent years. (see here and here).

Managing a lakh plus employees is never easy. What makes it even more difficult for the IT companies like Infosys is the rapid change in the market conditions keeping HR on their toes and forcing them to rehaul their manpower strategies every 48 months or so. Most IT companies had been growing at a staggering pace till almost last year. This resulted in non uniform policies across the business units and projects. Projects/ units which outperformed others were given preferential treatment almost across all companies. Promotions were pushed through recklessly to accommodate for the rapid increase in manpower and because of need to fill in the middle level management. However since the last couple of years, the slowdown has allowed the HR to create some uniform policies and to bring some sanity to the process.

Infosys however seems to have swung the pendulum too much to the other extreme by introducing policies like depromoting people who have been through a rapid growth in their career. What it basically means is that they admit it was a failure on their part to have promoted these people in the first place. But then promotions are made by the HR in consultation with the Senior Management. If they have done such a shabby job of it, then shouldn't some heads be rolling there in the first place. Their seems to be no news on that front though. In all likelihood its the very same HR people who had advocated these promotions who are now reversing it, all at the concerned employees cost of course.

HR is always a tricky business. Its almost as much about an image as about the actual implementation. More than the actual benefits that accrue to an employee, its the fairness of the whole process that determines employee satisfaction. That is where Infy seems to have failed the most in recent times. While the attrition rate seems to have held steady for them so far, the real test will probably come in the coming months, when the economic situation improves and companies go beserk in hiring. Will the company be able to hold on to these employees at that time. My hunch is that a lot of employees will be looking for greener pastures very soon. For a company that used to top the Best Employer survey pretty regularly till the recent past, that indeed will be tragic.

Tackling recession in IT

Although talks of a double dip recession and all time high unemployments are still doing the rounds in US, Indian IT firms seem to be all gung ho about the coming financial year. The expectations from the coming year the IT heads are talking about is not just rhetoric can be gauged by the hiring sprees, announcements of wage hikes, promises of better bonuses and one or more promotion cycles for the year. What happened last year could not be strictly called a recession for IT companies. While many core industries, especially Banking and Finance Services, suffered; with many closing down shops as well, the IT budgets never got slashed as much as one would have expected. New projects and investments in nascent technologies were kept in abeyance, but the savings being accrued from outsourcing and offshoring meant that the bread and butter of Indian IT industry was never in danger. In fact had it not been the fallout of jobs moving abroad and the new Governments policy of trying to keep jobs on shore, IT companies here might have even been able to reach their expected growth targets.

On the other hand while the rest of the world was grappling with recession, Indian IT found it the right time to consolidate their operations. Unbridled growth of the last decade meant that there was a lot of scope for cost savings and increasing efficiency. This was carried out in most companies by slowing down or stopping hiring, cutting down salaries for existing employees in some cases but mostly for fresh joinees from college. In addition the internal cost savings from cutting down on travel and stay, cutting down on operational expenses, consolidation of delivery centers, freezing the capex plans, and most of all by deferring hikes, bonuses, promotions and even annual gifts led to huge savings for these companies which would be carried down for a few more years.