Monday, August 21, 2006

NR Naryana Murthy Steps down

Infosys co-founder, Narayan Murthy, who believes in leading by example, has quit the position of chairman, taking retirement at the age of 60, on 20 August 2006. He held the helms of Infosys for the last 25 years. This decision looks like is on the lines of Microsoft chairman, Bill Gates, who declared that he would quit the office in 2008.

Nandan Nilekani will call the shots at Infosys as CEO and managing director, while Murthy will serve as non-executive chairman of the board and chief mentor. The Infosys board recently voted to let Murthy continue as the non-executive chairman and chief mentor, and has inducted him as an additional director on the board after his retirement. Somebody with only knowledge as his capital and somebody who holds on to values that are middle-class is able to do not only well but outstandingly well.Narayana Murthy served as CEO of Infosys for twenty years, and was succeeded by co-founder Nandan Nilekani in March 2002.

This news was no surprise for most of the Infoscions and the industry as well. Moreover Narayan Murthy stepped down from the post on Sunday and not a working day. This was to ensure that the work does not get hampered in anyways. At the juncture when Infosys is setting global standards every day and is amongst the world's most sought after companies, Narayan Murthy's decision of stepping down creates yet another first for the IT industry. Infosys was the first company to come out with the title of Chief Mentor and the foremost company in India to come out with the ESOPs. When a company is at the peak of success, its promoters wish to be at the helm of affairs. On the contrary Murthy took a step in the opposite direction and paved the way for younger talent to grow. This is perhaps the best way to create multilevel leadership within an organization which is the biggest problem of IT industry now.

Hats off this gentlemen who put India on the World's IT Map and did all this very humbly.

Sunday, August 20, 2006

CORPORATE - Politics Personified

My blog features very few movies. One of the first movies to get featured here was Rang De Basanti which I felt was class apart when compared to the other movies releasing every day.

Another movie which I saw while in Chennai on one of the weekends was CORPORATE. As the title suggests the movie tries to portray the corporate world which is non IT in nature and shows two rival groups trying to counter for each other's share in the market.

Madhur Bhandarkar has done a great job, must say that. The movie was well made which each part of the movie representing the problems which the people face at the top. There were two groups in the movie by name Marwa and Sehgals. The competition between them exists in every field with one trying to outcast the other with an acquisition or new product launch.

The movie portrays many problems which probably the corporate India faces today. The resignations of senior people in the company, unethical means which end up closing the company, corruption and the most important one the effect of politics on the functioning of a business house.

One of the incidents which I liked in the second half of the movie was the episode of pesticide in cold drinks. This episode happened in reality a few days ago when people in some western states literally break tons of cold drink bottles on the roads. In the movie the FDA people determine that the drink which the company is planning to launch contains pesticides and hence informs the manufacturers to close the shop. But the launch of cold drink was connected with the IPO of the company, the company officials bribe the FDA officials and get the clearance for it. But soon the rival company who has a close link to the CM informs about the pesticides story and the CM orders to close down the shop. The manufacturers lose pride, prestige and positioning in the market. Their FIIs start leaving the company. The share prices come down heavily and it becomes an acquisition target. Soon the FII who had invested in India goes and meets the FM and tells him that he is going to leave the country on account of bad reputation to his partnership and loss of shareholder value. FM now targets the CM and asks him to get the FDA clearance threatening him that not doing so can lead his party to lose the elections. Manufacturers get the FDA clearance, both the Sehgals and Marwas club hand together. CM wins the elections and FII stay in the country. On top of it the pesticide ladden drink also sells briskly in the market. Sehgals gain their position in the market and Everything comes back to normal.

The story described above is somewhat the reality today. Most of the issues in our country and either in the hands of most corrupt individuals or they just die the natural death. For example the OBC quota bill. There was so much hue and cry over it but finally the Govt passed it and now its going to be implemented in phases. Today when I was watching the news, I heard Ram Bilas Paaswan asking for more reservations for the SC/STs in the country. The case of pesticides came in front of Govt many times but nothing happened. Most of the time the problems and issues get entangled in the politics of our country without getting resolved. Yesterday while I was watching the news I could still see some new case of the Bhopal Gas Tragedy which happened close to 22 years back. In the above story Politicians have the entire say. They control the entire functioning of the business. If its in their interest, they would go to any extent and get the wrong thing done.
God knows, in which world we are actually living ?????

Saturday, August 05, 2006

Management Challenges - Compensation and Benefits

The idea of putting my thoughts on this topic came as a result of my completion of 1 year in this corporate world. I read first about Comp and Ben (as it is called in short) in the third trimester of my PGDM in the HRM subject. That was the time when I had absolutely no understanding of how it works and hence my appreciation of this topic was very minimal. Only now after a year, I am able to appreciate the importance of this subject.

This is the wage hike season for almost every sector. Normally the increase in the cost for the company due to wage inflation comes into picture only in the 2nd quarter but provision for such a hike is made in the first quarter results itself. For all the IT companies wherein there is no CAPEX, wage hikes is the major component which hits the bottom line most. One of the major question which arises here is how to balance this inflation in the interest of both the company and its associates.

For an IT organization, the biggest challenge lies in two areas. First aspect is retaining the customer and ensuring the profitability in terms of the billing rates. The second and probably more important aspect is the attrition rate. Attrition is a word which came into lot of prominence only after IT companies came into existence. This word got into fame when the people started hopping from one company to other in search of better salaries. Most of the times this is where the organization loses the most.

In the past 1 year I have seen many organization's attrition statistics and talked with a number of people who were leaving some very good organizations and joining smaller organization. One of the major things which I have seen is that the attrition at the junior management level which is something like the team lead, project lead, consultants, module leads, junior project manager is pretty high for most of the companies. Look at the attrition level at the Project Manager and above level like the kinds of AVP, VP and SVP and we are in for a change. In this category the attrition level is considerably low because of the simple fact that the incentives at this level are considerably more than the incentives at the level of PL, TLs or MLs.

Generally AVPs, VPs etc grow with the organization and reach this level only because they have been working in the organization right from a developer stage. Hence they enjoy significant benefits over their subordinates. Here is where the major gap comes into picture.

At the end of the day for any IT company, the real work or should I use the term software development ends at the level of PL only. Only in extreme cases that the PM participates in the software development and related tasks. So its a very general feeling among the people till the level of PL that they only do the entire set of tasks for the company and that their increments should be the best. But most of the time it does not happen.

For any IT company, people in the range of 1.5-5 years of experience are the most important assets. These people also constitute the set which is in very high demand in the current market and can command any amount outside their home company. Its very easy to gather people fresh from the engineering colleges and give them a paltry sum, sign a bond and retain them. But when it comes to people in the 155 group (Exp range from 1.5-5) retaining them is the key for the growth and stability of the project and thereby the company. Any amount of discrepancy in their C&B (compensation and benefit) can literally give a hit to the project. Also it could bring down their motivation levels and this would end up in cribbing about the company. Its more like a chain reaction, because if leader starts cribbing about the company, it will be followed by other team members and soon it will affect the way work happens within the organization. Freshers even if they leave the organization it does not make a difference because they can always be supplemented by if not better the same quality. People at the level of PMs, AVPs and VPs generally do not make a quick shift because of the benefits they derive, their adaptability to the workplace, the power they possess and the most important one that they are more or less stable in their career now. But what about the people in the 155 group???? Any answers.

To be continued.