Tvarita Consulting Blog

US: HR Pros Want Executive Pay to be Limited Further

There are more HR professionals who say that President Barack Obama's limits on executive pay for firms receiving bailout money don't go far enough than those who say the restrictions are on target, according to a poll on Compensation.BLR.com and HR.BLR.com.

In early February, President Obama and the Treasury Department issued a set of guidelines on executive pay for financial institutions that are receiving government assistance to address the current financial crisis. 

The guidelines put limits on executive compensation at banks receiving "exceptional assistance" from the federal government. If banks fall under the exceptional assistance standard, they must limit senior executives to $500,000 in total annual compensation (except for restricted stock).

When HR professionals were asked what they thought about the limits,  45 percent said they don't go far enough, compared with 43 percent who said the limits are fair and sensible. Just 12 percent of respondents said they thought the limits were too strict.

More than 500 HR professionals responded to the poll.

Two weeks before the release of the new guidelines, Obama criticized Wall Street firms for the size of the bonuses they paid out in 2008 despite the flagging stock market. He called the size of the bonuses the “height of irresponsibility” and “shameful.”

In January, the New York Comptroller reported that that the bonus pool paid by Wall Street to its employees in New York City totaled $18.4 billion in 2008. The size of the bonus pool was the sixth largest on record, but it was also a decline of 44 percent from the bonus pool in 2007.

On February 17, Obama signed legislation that includes a provision that prohibits participants in the Troubled Asset Relief Program (TARP)--which allows the federal government to purchase assets and equity from financial institutions in order to strengthen the sector--from giving executives “golden parachutes” or paying any bonus, retention award, or incentive compensation during the period in which they have TARP obligations outstanding. 

Source: Hr.blr.com

Employee Training: Getting Ready To Win Big Post Recession

Cost-Cutting, Cut-backs, Right Sizing, Down Sizing, Budget Control, Budget Restructuring ...the works. Sound familiar? 

If you aren't already enjoying a glass of nectar with St. Peters, you surely must have heard of or been involved in one of the above. Well, I don't have to tell you that no matter which term you keep your finger on, the context is the same: plug the leaks, save money! 

Now what's the easiest way to save money for most organizations globally? Care to venture a guess?

If your answer was: stop/do away with Training & Development, BINGO! Give yourself a pat on the back! 

Training & Development seemingly is one of the easiest areas for companies to 'mark-off' the list when it comes to deciding how to save money and rein in costs. While this seems like the most natural thing to do during times like these (Read: Times of Recession), many organizations are left playing 'catch-up' once normalcy returns.

This is because organizations which may have continued with skills augmentation exercises of their employees (they may have reduced training budgets but not done away with T&D altogether), never stop building up their people and hence, organizational capabilities, which puts them in a prime position to build quick in-roads into a healthy (but still a little shaky) market, thus creating critical Competitive Advantage. 

So while most companies would be trying to 'resurface' by going on a shopping binge (Read: Recruitments) in order to meet the demands of an economy returning to normalcy, the organizations which have had the foresight to keep developing employee skills will most likely find that they don't necessarily have to wait for quantitative enhancements to their workforce. Rather, their qualitatively superior workforce will help them exploit (in a positive way) the market conditions optimally, while simultaneously shoring up their workforce numbers without sweating. 

I came across this interesting article on The Wall Street Journal Online Edition by Dana Mattioli on how companies are renewing focus on training as they believe that managers and leaders with strong skills will help them move faster along the road to recovery. It's a good read and quite insightful. 

Here it is:

Despite Cutbacks, Firms Invest in Developing Leaders 

Your thoughts on the topic would be appreciated.

Happy Reading! 

UK: Restructuring of HR Depts on the Cards

A quarter of HR departments increased their headcount in 2008 and 31% are expecting to restructure this year. A survey of senior HR professionals by law firm Speechly Bircham and King's College London, shows more than half (58%) of the HR professionals surveyed said engagement was the biggest challenge for them this year, followed by succession planning (44%), talent management (38%), managing redundancies (35%) and managing growth and expansion (31%). And although 42% of companies reported redundancies in 2008, 28% of HR staff are still having to deal with staff shortages due to lack of qualifications and skills. 

Almost three out of 10 respondents (29%) reported an increase in employee grievances last year and 23% expect this to increase further in 2009 - and 11% think there will be an increase in grievances associated with pay and conditions. Richard Martin, employment partner at Speechly Bircham, said: " There seems to be a real concern about grievances escalating considerably at a time when employee engagement is cited as a major concern. With the abolition of the statutory dispute resolution procedures as of April 2009, employers will have to continue to devote energy and attention to their internal dispute resolution processes. Managers must realise aggressive management is not always the way to drive efficiencies across a business."

Source: www.hrmagazine.co.uk

US: Employees Allowed to Watch Obama Inauguration

According to the website HR.BLR.com, most employers allowed their workers to watch the presidential inauguration of Barack Obama on television or over the internet, according to a survey by Compensation.BLR.com and HR.BLR.com. 

In fact, more than half of them provided employees with a broadcast of the historical event. When asked “Did you allow employees to watch the Presidential Inauguration?,” over two-thirds of employers responded “Yes”: 57 percent responded “Yes, we provided a broadcast for employee viewing” and an additional 17 percent responded “Yes, we looked the other way if they watched on internet.” Only 28 percent of employers responded “No, if they wanted to watch they had to take time off.” 

It’s estimated that over 1 million people were in attendance in Washington, D.C. on January 20 to witness the inauguration in person. Another estimated 37.8 million viewers watched the inauguration on television—not including those who watched the event streamed over the internet. 

Meanwhile, CNN reported that it generated an all-time record 21 million online video streams on the day of the inauguration. 

The HR.BLR.com/Compensation.BLR.com poll included 326 respondents.

Satyam: A View From Below

 

With what can only be described a shocker, Satyam Computer Services has fallen from grace. A widely admired company and 4^th largest IT services provider in the country, Satyam was considered the pride of Hyderabad, not any more. Former CEO, Ramalingam Raju’s confession that the company had inflated assets and numbers to the tune of almost Rs.8000 crore has surely dented my confidence and trust in who runs a company.

Being in the HR profession, I feel strongly for the employees and can only imagine their plight at this moment of crisis. What can the human resources department do, how do you rebuild faith built upon several years of trust and loyalty? Will Satyam regain its lost glory? Serious questions and some of which I will try to give a view on.

For me the issue here is 'trust'. In wake of the current situation, can employees of any company be it large or small trust the top management. I would suggest that all companies be more transparent in their dealings and seek to involve employees at all levels while taking important decision whether related to potential takeovers, mergers or new business ventures. Of course it goes without saying, the financial books need to be regulated with a tighter noose (What were Satyam’s auditors doing???) It is quite unlikely that internal auditors were not in the know of the financial wrongdoings perpetrated in Satyam for years. Can the auditors merely wash their hands by saying the book of accounts is a primary responsibility of the management and auditors merely audit the documents provided to them by the management? The auditors need to explain what process they adopted in authenticating the inflated profits and fictitious assets referred to by Raju. SEBI needs to do a recheck on the prevailing measures and it would be wise on their part to have a look at the many of the big IT companies for a start! I’m not sure how a Satyam employee would be able to work. Reading an article on a news site, many Satyam employees are looking for opportunities elsewhere and it comes as no surprise that the job portals had a jump in the number of resumes being posted from 5000 to 14000 within a few hours and that number would surely have gone up with news that the company may have to let 10000 employees go as they struggle to find the cash required to pay a mammoth amount of Rs.500 crore per month. One of my colleague’s friends who just joined Satyam a month ago after receiving an offer of 8 lakhs has revealed he wouldn’t mind moving out even if it meant taking a pay cut.

Satyam’s Human Resources division would no doubt had a tough time with trying to allay the fears of employees and uncertainty of what the future holds. However, I see this as an opportunity for the HR to rise as leaders in troubled times (after all HR guys are the go-to people for most issues in any organization). The first step would be to ignore rumours being spread by media with all that is happened and furthermore to be patient with the proceedings. The next step should be to advise employees againstmeeting the media be it directly or anonymously. As a constant reminder it would be wise to have meetings and discussion with employees to stress the importance of sticking together- we will weather the storm. This is a good time as any to have employee engagements on their campus with activities such as team building games and motivational speeches to bring spirits up and also take away from the distraction of what has happened. The point I’m trying to make here is that the company need to shown that employees are valuable to them and will go to all possible extents to regaining their trust and HR can drive this point home. All said and done, the task of retaining employees will be extremely difficult and the possibility of a temporary reduction in pay over a extended period will not help the cause.

With a new board in place and potential bids coming in for the company, the uncertainty has grown but the new CEO has been honest, which is a refreshing change given the state of affairs, telling one and all that things have not been done in the right way, that mistakes have been made and it will take time to bring back a sense of normality. Speaking to a senior manager at Satyam, I was informed that although the media has portrayed an image of despair and gloom around Satyam, the reality is that people are going on about their work and HR has done a good job at keeping things on track. He further explained that all the work done by Satyam has been of high quality and hence they have large projects. HR has reminded people that their hard work and service to clients and projects has been a driving force towards retaining clients and building the company.

Kraft Signs HR Business Process Outsourcing Deal With IBM

Kraft Foods has signed a multiyear HR business process outsourcing agreement with IBM, marking the first such deal to be announced in several months.

Under the terms of the agreement, IBM will take over workforce administration, payroll, compensation, recruiting, learning and talent management for the Northfield, Illinois-based food company.

 Kraft has 103,000 employees in 180 locations worldwide.

Source: Workforce Management 

HR 2.0: Is Your Organization Ready For It? (Part 1)

This is a question that we have asked many of our potential HRO clients over the last 2 years. The response has varied from a firm 'NO' to an unsure 'Yes, we think so'. We came to realize early on that HR is still such a vague 'concept' in many organizations that for them, planning for HR 2.0 is akin to the Wright Brothers planning to build a Concord even before their first flight in a glider from Kitty Hawk. 

HR is even today, for many organizations globally, a support function and not a strategic one. But it is all changing gradually and inevitably as the 'War for Obtaining, Retaining & Developing Talent' (W.O.R.D) has gone from mere rhetoric in Management books to stark reality in today's times.  Yes, even in these economically challenging times, with Pink Slips raining unabated, the W.O.R.D is very much on. In the present scenario, organizations obviously want to cut costs, but yet want to retain that core group of professionals that will help them maintain a reasonable degree of competitive advantage, and more importantly help them bounce back quickly at the first signs of economic recovery.  

Hence, for example, we at Tvarita follow a well thought out, immaculately designed and diligently implemented HRO policy for all our clients. Its a three stage process, with each stage taking variable amounts of time depending on the organization design, size, growth plans etc. These time frames are usually decided in conjunction with the Leadership Team of the respective Organizations. 

Tvarita's Fundamental Approach 

However,  our approach is not the real objective of the article, its about discussing with the reader what constitutes HR 2.0. As with any new thought process, HR 2.0 too has its fair share of real and imagined ambiguity, with some professionals connecting it to the usage of Web 2.0 technology and some to more vigorous, seamless and far reaching HR processes. 

Then there are some (like us) who think it to be an amalgamation of both of the above. The reasoning is simple: any new thought process in this new age will find it almost impossible to survive without incorporating new age technology. 

This discussion will continue in Part 2 of this article and shall focus on the specifics of HR 2.0.

Please feel free to share your thoughts and views on this article.