The financial advantages of ESG are increasingly apparent. Professor George Serafeim of Harvard Business School highlights a robust correlation between strong ESG performance and higher operating margins. This, coupled with the growing significance of ESG for investors and stricter regulatory norms, is prompting businesses to take heed.

Beyond the financial benefits, leading companies are recognising the intrinsic value of ESG. Ashok Leyland, for instance, has seamlessly integrated ESG considerations into key result areas and senior leadership strategies, showcasing a commitment that extends beyond boardroom discussions to tangible actions.

There’s limited awareness among the Indian workforce regarding ESG and its importance. This, coupled with the prevalence of social issues such as low female workforce participation, paints a concerning picture

Varadarajan S, a Tata veteran and former CHRO, Vistara Airlines

Varadarajan S, a Tata veteran and former CHRO, Vistara Airlines, a Tata Group company, articulates the Tata philosophy, stating, “Corporate enterprises must be managed not merely in the interests of their owners but equally in those of their employees, consumers, local communities, and ultimately, the country as a whole.”

Jindal Stainless stands out for its strategic integration of ESG principles into corporate culture. Its initiatives, ranging from plastic waste-collection drives to renewable energy adoption, not only enhance operational resilience but also solidify their position as a leader in sustainable manufacturing.

The ESG Gap Varadarajan highlights the limited ESG adoption in India: “It’s still at a nascent stage, primarily among a few large corporations and MNCs. The lack of clear frameworks and lukewarm implementation of governance principles lead to numerous concerns, including environmental degradation and non- performing assets.”

HR leads initiatives in diversity and inclusion, employee well-being, CSR, ethical training and environmental sustainability. Each programme has specific KPIs to measure success. Metrics such as energy consumption, waste generation and carbon emissions track progress towards environmental sustainability goals

Salil Chinchore, CHRO, ElasticRun

This lack of awareness extends to the workforce. Varadarajan adds, “There’s limited awareness among the Indian workforce regarding ESG and its importance.” This, coupled with the prevalence of social issues such as low female workforce participation, paints a concerning picture. Sushil Baveja, CHRO, Jindal Stainless, emphasises the link between individual values and ESG, stating, “The pursuit of ESG-aligned employment reflects a shift towards self-actualisation, where aligning with personal values becomes crucial.” However, he cautions that this trend, particularly in diverse markets such as India, depends heavily on individuals’ basic needs being met first.

Baveja adds, “While there’s growing interest in ESG investing and sustainability reporting in India, the conversation around ESG in the workplace and its influence on employment choices is nuanced and varies across demographics.” This suggests a complex interplay between personal needs, individual values and the evolving ESG landscape in India.

While there’s growing interest in ESG investing and sustainability reporting in India, the conversation around ESG in the workplace and its influence on employment choices is nuanced, and varies across demographics

Sushil Baveja, CHRO, Jindal Stainless

Despite the challenges, ESG awareness is gradually improving among job seekers. Salil Chinchore, CHRO, ElasticRun, observes, “Candidates are wary of companies lacking ethical or environmental responsibility.” This underscores the growing importance of conducting due diligence on potential employers’ ESG practices, says Chinchore.

Mussarat Hussain, head-HR, Suzuki Research & Development India, reaffirms the significance of ESG beyond boardrooms: “The discussion around ESG is no longer confined to select circles. It’s a topic of genuine interest and concern among employees, job seekers and consumers in India. Organisations need to take it seriously to attract and retain talent and maintain their competitiveness.”

HR: The ESG champion within

Traditionally considered the ‘canary in the coal mine’ in corporate culture, HR departments are the first to encounter emerging employee concerns, whether related to diversity and inclusion, fair compensation, or mental health. As sustainability gains prominence, HR finds itself well placed to champion Environmental, Social and Governance (ESG) initiatives within organisations. However, the question remains—‘Is HR uniquely qualified for this role?’ Experts suggest that the willingness and ability to understand the broad scope of ESG are more crucial than specific professional backgrounds.

The ideal leader, irrespective of their discipline, should possess the following key attributes:

Communication and influence: Effectively communicating with and influencing the board is paramount, as ESG initiatives often require significant investment, discipline and a long-term commitment.

Constant learning: ESG is a rapidly- evolving field demanding continuous learning and awareness of global and local trends, legislative changes and best practices.

Courage and integrity: The ESG leader must have the courage to hold the organisation accountable for its commitments and call out any shortcomings.

HR drives initiatives that impact employee well- being, ethical conduct and environmental sustainability. Quantitative and qualitative metrics are essential to gauge the success and impact of these programmes

Mussarat Hussain, head-HR, Suzuki Research & Development India

While these qualities define an effective ESG leader, their specific position within the organisation is a secondary consideration. Whether it’s an HR professional, a finance head, or a marketing executive, the ability to leverage these skills effectively is what matters.

HR’s multifaceted approach positions it at the heart of successful ESG implementation, bridging the gap between operational practices and societal impact. Environmental leadership can begin with HR itself, promoting sustainable practices through green policies such as adopting electric company vehicles, setting an example for the entire organisation.

Social responsibilities are already deeply ingrained in HR’s traditional domain, encompassing diversity, equity and inclusion (DEI), employee well-being and community engagement. The HR function can leverage this expertiseto foster a more inclusive workplace by ensuring that diversity data informs recruitment, promotion and development strategies.

The CEO or CHRO is ideally positioned to spearhead this transformation. Technical expertise, while valuable, isn’t the sole critical factor. Instead, the key is having someone who comprehensively understands the organisation, recognises the expertise within, identifies key influencers and can adeptly negotiate and convey the organisational perspective to the world

Santanu Ghosal, CHRO & head – CSR, Schaeffler India

Fostering inclusivity and respect enhances employee engagement and satisfaction, which are crucial for long-term success. Governance involves ensuring transparent, ethical and value- aligned management practices. By developing policies and programmes that promote ethical behaviour and accountability among all employees, the HR plays a critical role.

For decades, HR has spearheaded Corporate Social Responsibility (CSR) initiatives, bridging the gap between societal needs and corporate philanthropy. Additionally, HR has anchored employee engagement, morale, retention, health, safety, compliance and regulatory requirements. These core elements align seamlessly with

ESG’s focus on employee well- being, inclusive growth and robust governance. While CSR lacked a unified framework, ESG provides a methodology to drive and measure impact, making it an even more powerful tool. Notably, ESG presents a valuable lever for attracting and retaining talent, especially in today’s job market where individuals increasingly seek ethically and sustainably-focused companies.

The challenge is twofold: percolating ESG principles across the business spectrum, covering medium- and small-scale industries, as well as tiny and cottage industries. Additionally, monitoring lifecycle measurements and product lifecycles, especially for products with extended lifespans such as automobiles, remains a complex but essential aspect of genuine ESG commitment.

Balachandar NV, Consultant CSR and Corp Affairs, Ashok Leyland

Aligning the organisation’s culture with ESG principles is essential for successful implementation.

By leveraging its focus on people and culture, expertise in engagement and change management, influence on talent attraction and retention, stakeholder management skills, policy and process-implementation expertise, and risk-management capabilities, HR is uniquely positioned to champion ESG initiatives within any company. This multifaceted approach ensures that

ESG goes beyond mere compliance, becoming a core value woven into the very fabric of the organisation. Santanu Ghosal, CHRO & head – CSR, Schaeffler India, and sustainability coordinator for Schaeffler AP, emphasises that ESG permeates multiple spheres within an organisation. Given its broad scope, expecting expertise in all areas from a single individual is unrealistic. Ghosal underscores the crucial role of a C-suite leader in driving ESG initiatives. Beyond hard KPIs, this endeavour represents a significant cultural transformation, demanding someone familiar with the organisation’s intricacies, pulse and trigger points.

A strong ESG agenda attracts talent who believe in these principles, enhancing the employee value proposition. Contributing to global sustainability goals and making a positive environmental impact is attractive to many

Siddharthan R, former CHRO, Hippo Stores & Dalmia Cement

In this context, Ghosal argues that the CEO or CHRO is ideally positioned to spearhead this transformation. “Technical expertise, while valuable, isn’t the sole critical factor. Instead, the key is having someone who comprehensively understands the organisation, recognises the expertise within, identifies key influencers in various segments, communicates effectively, inspires others and can adeptly negotiate and convey the organisational perspective to the external world.”

While ESG promotion is crucial across all industries, as Hussain emphasises, “Certain industries require extra attention from HR due to their substantial environmental and societal impacts.” By actively integrating ESG principles into organisational practices and fostering a culture of responsible leadership, HR can ensure that businesses contribute positively to the environment and society, leading to long-term success and a more
sustainable future.

Reaching the second rung: Tiered suppliers and the ESG conundrum

The imperative to infuse ESG principles across the entire business spectrum, including small and medium-sized enterprises (SMEs) and micro-businesses, is pivotal. This transformation necessitates the development of tailored strategies and the promotion of awareness within these segments.

A key challenge lies in disseminating ESG practices to ‘second rung’ companies, such as two-tier and three-tier suppliers, who often lack the resources and expertise of larger firms. These suppliers play a critical role in the manufacturing value chain, and their environmental and social practices can significantly impact the overall ESG footprint of larger corporations.

A cautionary tale is that of Nike, which faced immense backlash for its short-sighted approach. In 2014, the Rana Plaza collapse in Dhaka tragically claimed thousands of lives, many of whom were garment workers producing apparel sourced by Nike under allegedly poor working conditions. This incident exemplifies the reputational risks associated with neglecting ESG considerations throughout the supply chain.

Service organisations encounter a different set of challenges. While compliance with regulations is crucial, embedding the spirit and letter of ESG principles within their operations demands a deeper commitment. This involves fostering sensitivity and maturity towards these principles, translating them into tangible practices.

Balachandar NV, consultant CSR and corp affairs, Ashok Leyland, emphasises the challenges associated with scope 2 and scope 3 emissions. He notes, “In scope 2, at least we have visibility, but scope 3 poses significant challenges due to its complexity and lack of standardised measurement methodologies.” The challenge is twofold: percolating ESG principles across the business spectrum, covering medium- and small-scale industries, as well as tiny and cottage industries.

Additionally, monitoring lifecycle measurements and product lifecycles, especially for products with extended lifespans such as automobiles, remains a complex but essential aspect of genuine ESG commitment.

Cascading ESG principles across the broader business spectrum, encompassing SMEs and even smaller players such as cottage industries, presents a significant challenge. Transforming this into a societal movement requires effective communication, capacity building, and potentially incentivising mechanisms to encourage adoption.

Beyond the immediate challenges, achieving long-term ESG goals necessitates robust lifecycle management and measurement systems. This includes tracking and measuring the environmental impact of products throughout their entire lifecycle – from raw- material extraction and production to usage and disposal.

Effectively addressing these challenges requires a collaborative approach. Larger corporations, industry bodies and policymakers must collaborate to develop practical frameworks, implement capacity-building programmes, and potentially establish standardised reporting formats for smaller organisations. By bridging knowledge and resource gaps, promoting transparency and fostering collaboration, we can collectively ensure that ESG principles permeate every corner of the business landscape, paving the way for a more sustainable and equitable future.

In summary, while numerous hurdles exist on the path to widespread ESG adoption, acknowledging and actively addressing these challenges through collaborative efforts can pave the way for a more inclusive and sustainable future for all. As we strive to ensure that ESG is not just a buzzword but a tangible force for positive change, collaboration and collective action will be essential on this critical journey.

HR’s metrics-driven approach to ESG: Success stories and impact measurement

Environmental, Social and Governance considerations are rapidly evolving from mere compliance mandates to strategic imperatives for businesses. Human resources departments are emerging as key players in driving successful ESG programmes, leveraging their unique position to influence employee behaviour and company culture.

However, measuring social impact remains significantly more complex compared to environmental aspects. Companies are actively innovating to overcome this hurdle, seeking effective ways to define targets and track progress in their social-impact initiatives.

As Varadarajan explains, “ESG metrics are performance indicators that assess a company’s environmental, social and governance practices. Similar to traditional business metrics, they gauge operational performance and risk, often stemming from existing KPIs linked to ESG goals.” These metrics, either quantitative (such as greenhouse gas emissions) or qualitative (such as employee surveys), provide crucial insights into a company’s ESG journey.

Conventionally, investors relied solely on financial data to assess investment viability. Today, they increasingly include ESG metrics alongside traditional ones, recognising their impact on long-term performance and potential risks.

Human resources departments play a vital role in developing and tracking ESG metrics related to social and governance aspects, such as Diversity, Equity and Inclusion (DE&I), employee well-being and ethical conduct.

Several companies demonstrate how effective HR practices can contribute to achieving ESG goals. ITC, for instance, has successfully integrated sustainability into its core strategy, achieving carbon positivity, water positivity and solid waste recycling positivity for consecutive years. This success stems from aligning ESG goals with corporate goals and, crucially, with HR initiatives and practices, ensuring employee alignment with the company’s sustainability vision.

Similarly, JK Group exemplifies how HR practices can be aligned with ESG goals. The Group’s commitment to social development extends beyond operations, focusing on improving the lives of various stakeholders. Focus on the ’triple bottom line’ —economic, environmental and social—ensures responsible business growth while addressing global trends and stakeholder needs. For instance, JK Paper plants more trees than it harvests, achieving net carbon positivity. The company’s social forestry programme has benefited over 65,000 farmers.

Infosys exemplifies successful alignment of HR practices with ESG principles. The firm balances business success with strong governance and a focus on social and environmental needs. This commitment translates into ambitious environmental preservation goals, community-development initiatives and tracking of employee performance against well-defined ESG goals. Infosys’ efforts have been recognised by the UN with the prestigious UN Global Climate Action Award.

There are several other examples where the HR function has driven the ESG agenda in organisations. For instance, JSW’s CARE model focuses on the holistic well-being of employees to drive the organisation’s growth agenda. The basic philosophy behind CARE is— “A well-communicated employee who is agile becomes responsible and elevated.” JSW, as an organisation, drives employee engagement through cross-functional teams across all levels, engaging with India’s premium institutes to develop leaders at all levels. Its special interventions help develop women leaders. It conducts sensitisation workshops to drive behaviours that encourage inclusion, reduce bias, and, in turn, foster creativity across the organisation.

Nike, though facing backlash for the Dhaka incident, has a governance focus on the Pay Equity model. Its multiple interventions across different geographies ensure 100 per cent pay equity across all employee levels on an annual basis, aligning with UN Sustainable Development Goals 5 (Gender Equality) and 8 (Decent Work and Economic Growth).

However, not all companies get it right. Ghosal cautions against ‘greenwashing’, where companies make misleading or unsubstantiated environmental claims, highlighting the case of Vedanta’s ‘Creating Happiness’ campaign, which was criticised for its negative environmental and social impacts.

HR’s dashboard of ESG impact Chinchore elaborates on HR’s key areas of involvement in ESG programmes: “HR leads initiatives in diversity and inclusion, employee well-being, CSR, ethical training and environmental sustainability.

Each programme has specific KPIs to measure success.” Metrics such as energy consumption, waste generation and carbon emissions track progress towards environmental-sustainability goals. Hussain aptly summarises HR’s crucial role in ESG programmes: “They drive initiatives that impact employee well-being, ethical conduct and environmental sustainability. Quantitative and qualitative metrics are essential to gauge the success and impact of these programmes.”

By embracing ESG principles and leveraging their unique capabilities to measure and demonstrate impact, HR departments are poised to play a pivotal role in shaping a more sustainable and responsible future for businesses.

Ghosal emphasises, “One of the key components of any successful ESG initiative is to engage with stakeholders, understand their perspective and make them a part of the transformation. The ‘S’ (Social) component of ESG is becoming the most critical component. The human resources function plays a critical/key role in driving the ‘S’
dimension in ESG in many areas.”

The ESG imperative: Shaping company culture and attracting talent

The entry of millennials and Gen Z into the workforce marks a pivotal moment in employee expectations. These cohorts are in pursuit of meaningful work, purpose-driven brands and companies deeply committed to social responsibility. This dynamic landscape calls for a cultural overhaul within organisations, one that seamlessly integrates ESG principles into their core values.

Multi-generational challenges

Observations reveal a surging trend among Indian professionals, particularly the younger generations, prioritising employment with organisations showcasing a robust commitment to ESG principles. This demand extends beyond high-level executives, encompassing employees across various levels and sectors expressing concern about their employers’ ethical, social and environmental practices. While newer companies may boast a younger workforce, established organisations, especially in manufacturing, may grapple with a larger Gen X or Y population.

Varadarajan emphasises the need for awareness building among these demographics: “While not averse to ESG principles, Gen X and Y employees may require more education compared to Gen Z, who are more exposed to these concepts. Leadership and the HR must focus on building awareness through appropriate training.”

Baveja reinforces the trend of younger generations favouring ESG-conscious companies.“Deloitte’s findings reveal that over 40 per cent of Gen Z and Millennials would switch jobs due to climate concerns. This alignment in values and commitment to long-term sustainability is reshaping how companies approach their Employer Value Proposition (EVP).”

Chinchore emphasises the increasing environmental consciousness, particularly among Gen Z.“Educated on environmental issues from their school days, Gen Z expects employers to be environmentally responsible.” Ghoshal adds, “My observation is that employees, irrespective of age group, show similar interest and engagement in ESG interventions if they are passionate about it or believe in the narratives articulated by company executives. It is crucial to explain the context to win them over.”

ESG and the talent landscape:

Varadarajan sheds light on ESG’s impact on talent acquisition and retention: “ESG will significantly influence talent strategies. The HR plays a crucial role in driving organisational changes around hiring, development and retention, ensuring equitable practices across various demographics.”

Ghosal further explains, “The talent pool demographics are undergoing a clear shift, with a preference for companies that have a clearly-defined purpose and a commitment to creating a better tomorrow. Many are interested in volunteering their time to be part of this movement.”

HR’s role in shaping ESG culture

Siddharthan R, former CHRO, Hippo Stores & Dalmia Cement, emphasises the role of ESG in attracting talent. “A strong ESG agenda attracts talent who believe in these principles, enhancing the employee value proposition. Contributing to global sustainability goals and making a positive environmental impact is attractive to many,” he says.

The role of HR is crucial in establishing a clear connection between the company’s sustainability goals and their societal and environmental impact. Implementing training programmes and fostering a culture of responsible citizenship are essential steps. Measuring progress against ESG goals ensures adherence and institutionalisation of these values throughout the organisation. Human resource policies need to align with ESG values. Linking executive compensation to ESG performance metrics incentivises leadership to prioritise sustainable and socially-responsible decision-making. The HR should collaborate with other departments to develop work practices that minimise environmental impact, promote social responsibility and encourage the development of sustainable solutions.

The HR can act as an ESG partner by engaging with employees, stakeholders and the community to understand their perspectives on ESG matters. This feedback can be used to refine the company’s ESG initiatives, ensuring alignment with stakeholder needs and expectations. Employee well-being programmes and fostering a healthy work environment are the responsibilities of the HR. Aligning these practices with ESG principles is crucial. Focusing on employee health and safety contributes to the social aspect of ESG and helps create a sustainable workforce. Implementing transparent reporting mechanisms ensures that the company is held accountable for its ESG commitments. This involves regularly monitoring metrics such as carbon emissions, diversity ratios and community-engagement initiatives.

Ghosal emphasises, “ESG as an agenda or priority area for the organisation needs to come from the top. Once the initial enthusiasm fades, the HR, along with C-suite executives, must ensure that ESG is embedded into the company’s business strategy and KPIs. The HR’s role is critical in enmeshing ESG into the organisational DNA.”

Challenges and the road ahead

Navigating the integration of ESG principles into HR policies and practices presents several formidable challenges. Striking a delicate balance between ESG and overall business objectives proves intricate, demanding meticulous attention to both financial and ethical goals. The process itself is intricate and time consuming, involving extensive assessments and compliance with stringent standards. Gaining support from senior leadership for the benefits of ESG initiatives can be a challenging task, requiring persuasive communication.

Initiating a cultural shift in established practices and mindsets poses a significant hurdle, necessitating comprehensive change-management strategies. Effectively measuring the impact of ESG initiatives adds complexity, demanding the establishment of new metrics and key performance indicators (KPIs). Additionally, skill development becomes crucial, necessitating tailored training programmes in sustainability and ethics. Ensuring inclusivity, whereby all employees actively engage in ESG initiatives, is paramount for success.

Despite these challenges, prioritising ESG in HR is deemed critical for long-term sustainability and the establishment of ethical practices within organisations. Ghosal notes, “ESG is beneficial in the longer run, requiring investments with a long gestation period. Human resource leaders need to coach high-potential leaders to change their leadership style.”

Expertise of the HR and leadership is crucial for ESG success. They can support businesses and employees in adopting behaviours aligned with ESG principles. This involves creating an ESG-centred business strategy, integrating sustainability measures into performance assessments, and assessing ESG risks and opportunities in investments or mergers and acquisitions.

However, having the appropriate HR leadership is a major challenge. Varadarajan highlights the need for constant communication and training in an easy-to-understand language to enhance employee understanding and commitment to ESG objectives. Establishing a robust data-governance framework is necessary for maintaining data integrity and tracking performance against ESG initiatives.

The adoption of ESG principles in the Indian workplace presents a nuanced picture. While challenges exist, a growing awareness and demand for ESG-aligned employers is evident. As companies embrace responsible business practices and individuals prioritise workplaces aligning with their values, the future of work in India is poised for a positive transformation, driven by a shared commitment to sustainability and ethical conduct.

The post The ESG imperative: A tale of transformation and opportunity appeared first on HR Katha.

However, since the 2000s, we have taken significant steps to make workplaces safer and fairer for everyone. One of the big changes is the PoSH Act, short for the Prevention of Sexual Harassment Act of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013. This important law was created to ensure that women feel safe and respected at work.

The PoSH Act

The PoSH Act, or the Prevention of Sexual Harassment Act of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, is a vital legislation in India addressing workplace sexual harassment. Its primary goal is to protect women’s rights and well-being by ensuring a harassment-free work environment.

About 60% of companies in big cities see PoSH as a vital part of how they do business,
and not just a rule to follow. In comparison, in smaller towns, the compliance rate is
below 50-10%

Viji Hari, CEO, CecureUs

Before its implementation, India lacked a specific legal framework for this issue, making it a significant milestone. The act mandates internal complaints committees (ICCs) in organisations with over 10 employees, emphasising prevention and resolution.

It also aligns with India’s commitment to gender equality, fostering an equitable and inclusive workplace. Importantly, the Act establishes a clear procedure for complaints, inquiries and penalties, providing women with a structured path to justice and resolution.

If it is so important and so favourable, then why do companies shy away from it?

How do organisations perceive the PoSH Act?

The way the PoSH Act is perceived differs from organisation to organisation. While some view it as a necessary and crucial step towards creating a safe and inclusive work environment, others may see it as an added regulatory burden or just a precautionary step.

The Act’s perception often depends on factors such as the organisation’s commitment to gender equality, its awareness of the Act’s provisions, and its willingness to proactively address sexual harassment issues. Ultimately, organisations that embrace the Act tend to prioritise the well-being of their employees and promote a more equitable workplace.

According to Viji Hari, CEO, CecureUS, “In big cities such as Mumbai, Delhi, Bangalore, and Chennai, companies take the rules about preventing sexual harassment seriously. About 60 percent of them see it as a vital part of how they do business, and not just a rule to follow. In smaller towns, however, many companies don’t pay as much attention to these rules, often considering them a mere formality. So, there’s a difference in how companies in big cities and smaller towns follow these rules.”

She further adds that in smaller towns, the compliance rate is significantly low, often below five or 10 per cent. Private corporations and institutions, including hospitals, show lower compliance levels compared to larger corporate entities.

Some smaller companies, particularly those working closely with MNCs and global businesses, recognise the importance of PoSH compliance. On the other hand, family-owned businesses, often smaller in size, may resist implementing POSH compliance.

They may perceive it as opening a Pandora’s box, introducing a concept that could disrupt the status quo. This diversity in attitudes may be influenced by the nature of the clients and the industries these companies operate in.

“The adoption of PoSH compliances in organisations is heavily influenced by their culture. The way organisations perceive and value these compliances is crucial.”

Smita C Kapoor, CEO and co-founder, Kelp HR, states

Smita C Kapoor, CEO and co- founder, Kelp HR, strongly believes that adoption of POSH compliances in organisations is heavily influenced by their culture. “The way the organisations perceive and value these compliances is crucial.” “Some organisations embrace POSH compliance as a genuine commitment, driven by a belief in its importance and a desire to create a respectful work environment. However, there are those who
treat it merely as a checkbox for compliance. The organisation’s culture and leadership play a significant role in determining it’s approach to POSH compliance,” explains Kapoor.

Speaking about the current status of POSH compliance, Kapoor feels that it is worth mentioning, looking back at the history. “The POSH guidelines were outlined in 1997, but many remained unaware of their existence until much later. For instance, I personally became aware of them in 2008, when they began to be integrated into our curriculum at the academy. Since then, the compliance efforts of organisations have been varied. Some have been proactive and fully compliant, while others have either ignored the guidelines or treated them as mere formalities.”

Roadblocks to embracing the PoSH Act

The biggest deterrent for companies to embrace PoSH compliances is a desire to sweep issues under the rug, to ignore them, or to avoid acknowledging their existence. This mindset tends to lead to the misconception that if complaints aren’t filed, there’s no need to comply. Additionally, some companies may lack trust in their management or fear that addressing such issues will disrupt their operations.

Shailesh Singh, CHRO, Max Life Insurance, shares that larger and more established companies appear to have embraced and implemented these regulations to a greater extent, while smaller and newer companies lag behind. He points out several factors that contribute to this situation.

“First and foremost, there is a significant lack of awareness among corporate leaders, especially in midsize and newer companies. Many are unaware of the existence of the 2013 Act, and this lack of awareness is a significant hurdle.”

“By handling the initial case with the utmost care and transparency, the company sets a significant precedent. When employees witness a tangible example of a complaint being
addressed effectively, it can serve as a powerful motivator for others to feel confident
about speaking up.”

Bhuvaneswar Naik, CHRO, Lentra

He further compares India to the global stage. Awareness of women’s diversity rights is notably lower in India than in the West. This extends to the corporate sector, where many individuals take these principles for granted and may not have deeply ingrained values regarding diversity and women’s empowerment. This lack of conviction contributes to the low of PoSH compliance.

Another significant hurdle is the comprehensive nature of the PoSH Act itself. It requires organisations to establish committees with powers akin to those of civil courts to gather evidence and follow a specific, detailed process for investigations. This process can be cumbersome and resource-intensive for companies.

According to Preeti Jain, VP-HR, Airtel, when we consider mid-sized and smaller offices, there is still work to be done. Some of these companies may face challenges, perhaps due to resource limitations or the absence of in-house training facilities.

Singh further mentions, “The Act mandates the formation of committees for locations with ten or more women employees, specifying their tenure, composition and procedures. Once an investigation is initiated, the corporate entity has limited influence over the committee’s final decisions, as these committees wield considerable legal authority. While management can present their perspective, they must navigate this delicate balance between running an independent company and respecting the committee’s autonomy. Many organisations find this aspect challenging.”

PoSH fosters empowerment and saves costs

Kapoor observes that organisations that proactively involve their employees in awareness sessions have observed a notable decline in harassment cases over time, even though they may not have completely eliminated such incidents.

By engaging employees in these awareness sessions, organisations empower their workforce to become active contributors to a safer and more respectful workplace environment. These sessions serve as platforms for open dialogue where employees can share their concerns, experiences and insights related to harassment. This not only helps identify potential issues but also fosters a sense of ownership and responsibility among employees to maintain a harassment-free workplace.

Bhuvaneswar Naik, CHRO, Lentra, points out that it is crucial to emphasise the significant financial implications associated with employee turnover. “Replacing an employee can be a costly endeavour, involving not just the recruitment process but also the time and resources invested in training a new hire.”

“There is a significant lack of awareness among corporate leaders, especially in midsize and
newer companies. Many are unaware of the existence of the 2013 Act, and this lack of awareness is a significant hurdle.”

SHAILESH SINGH, sr. director & CPO, Max life insurance

When a company takes proactive steps to prevent harassment and creates an inclusive, respectful workplace, it not only retains its existing talent but also avoids the substantial expenses linked to employee replacement.

These cost savings go beyond monetary considerations. They extend to the preservation of institutional knowledge and expertise. When experienced employees stay, they continue to contribute their skills and knowledge to the organisation, maintaining continuity and stability.

Overlooking the PoSH Act: Risks and missed opportunities for companies

Companies that choose not to implement PoSH compliance measures may unintentionally miss out on several valuable benefits. Overlooking the PoSH Act can result in substantial risks and missed opportunities for organisations.

Neglecting the issue of workplace sexual harassment not only puts employee well-being in jeopardy but also leaves companies vulnerable to legal and reputational challenges.

The PoSH Act offers several compelling advantages for organisations. First, it can help cultivate a safer and more harmonious workplace culture, ultimately contributing to the overall well-being of employees. A work environment free from harassment fosters greater job satisfaction and productivity, enhancing the quality of life for staff members.

Most importantly, prevention through compliance with the Act is significantly more cost-effective than dealing with the aftermath of harassment complaints and the subsequent redressal procedures. By proactively implementing preventive measures, companies can save both time and resources.

Additionally, adherence to the PoSH Act can safeguard a company’s brand and reputation.Public perception of a business is closely linked to its commitment to providing a safe and respectful workplace. Complying with the Act can mitigate the risk of reputational damage and potential legal consequences, preserving the company’s standing in the eyes of customers, investors and partners.

Addressing workplace harassment can lead to lower attrition rates. When employees feel protected and valued, they are less likely to leave their jobs due to a hostile work environment. This retention of valuable talent not only ensures continuity but also saves recruitment and training costs, making it a strategic advantage for any organisation.

Embracing the PoSH Act is not just a legal obligation but a proactive approach that can yield numerous benefits — from improved workplace culture to financial savings and reputation preservation.

Hesitation because of misuse!

One common and major reason for hesitation in implementing the PoSH Act is concern over potential misuse. Some organisations may worry that false accusations or misuse of the Act’s provisions can lead to unwarranted consequences for employees or damage to their reputation.

The PoSH Act, like any legal framework, has the potential for misuse in certain situations. Here are a few scenarios in which it can be misused:

False accusations: One of the primary concerns is false accusations of sexual harassment. An employee may make a baseless claim against a colleague or superior for personal gain, revenge, or simply to tarnish someone’s reputation.

Malicious intent: Individuals with malicious intent may misuse the Act to target someone they have personal grievances against, using it as a tool for harassment themselves.

“There is a growing expectation for companies to have PoSH compliance measures in place to address any issues that may arise. Raising concerns is not seen as a challenge anymore, as awareness and acceptance of one’s rights have become more prevalent.”

Preeti Jain, VP-HR, Airtel

Unfounded complaints: In some cases, employees may misinterpret normal workplace interactions or misunderstand situations, leading to unfounded complaints filed under the Act.

Retaliation: An employee who has faced disciplinary actions or negative feedback may file a harassment complaint in retaliation, even if the complaint is not genuine.

Influence over decisions: There is also the potential for misuse by those in positions of power who could use the Act to exert influence over colleagues or subordinates.

Hari strongly believes that while concerns about misuse are valid, it’s important to note that the majority of cases are not malicious. She observes, “In most instances, employees who come forward have genuine concerns. Stereotyping the entire process based on a small number of malicious complaints is not accurate.”

To effectively address the risk of misuse, organisations should take proactive steps. They can establish a foundation of clear policies, provide comprehensive employee training and establish a strong ICC dedicated to diligently investigating complaints. Timely and impartial investigations are key to upholding the Act’s intended purpose while minimising the possibility of misuse.

Educate, sensitise, train and then implement

Organisations that have prioritised training, awareness and a strong commitment to the spirit of the law have seen positive results.

One crucial approach involves giving priority to the very first employee who comes forward with a complaint. Naik opines, “By handling this initial case with the utmost care and transparency, the company sets a significant  precedent. When employees witness a tangible example of a complaint being addressed effectively, it can serve as a powerful motivator for others to feel confident about speaking up.”

Moreover, conducting live sessions and practical demonstrations can play a pivotal role in reinforcing the desired cultural change. These interactive sessions provide a platform for open discussions, real-life scenarios and hands- on learning, making the new culture more relatable and understandable to the workforce. Furthermore, involving employees in discussions about harassment and safety builds trust between the workforce and the organisation. It sends a clear message that the company values its employees’ well-being and actively seeks their input in shaping a more inclusive and secure workplace. This collaborative approach not only aligns with the spirit of the PoSH Act but also contributes to a positive and cohesive work culture where everyone feels respected and protected.

Hari shares, “In some cases, over the past six to seven years, organisations that have actively engaged employees in awareness sessions have reported a significant reduction in harassment cases. While not at zero, these organisations have seen a notable improvement in their workplace culture. Another positive outcome is the shift from a top-down approach to one where employees are actively engaged in discussions about harassment and safety. This collaborative approach has yielded positive results, with employees feeling more empowered and valued.”

Creating a culture of sensitivity and respect requires a multi-faceted approach that includes not only addressing complaints but also actively demonstrating the desired behaviour through real-world examples and engaging employee interactions.

Why is the PoSH Act a must?

In the long run, absence of PoSH compliance can be detrimental to companies. Jain believes, “Nowadays, people, especially the younger generation, are increasingly aware of the type of workplace environment they should expect. They understand their rights and the need for a safe and inclusive environment for all genders.”

She further emphasises that there is a growing expectation for companies to have PoSH compliance measures in place to address any issues that may arise. Raising concerns is not seen as a challenge anymore, as awareness and acceptance of one’s rights have become more prevalent.

The PoSH Act doesn’t stop at legal mandates; it promotes awareness and sensitisation programmes within organisations. These initiatives aim to educate employees about what constitutes sexual harassment and the repercussions of such behaviour. Through these efforts, the Act strives to cultivate a culture of respect and dignity in workplaces.

To further reinforce the importance of compliance, the Act specifies legal consequences for organisations that fail to adhere to its provisions. Penalties can include fines and even imprisonment, acting as a discouragement to employers who may be inclined to overlook sexual-harassment issues.

Organisations should concentrate on fostering a workplace culture where legitimate concerns can be reported without fear of adverse consequences. This entails nurturing open communication channels, cultivating trust between employees and management and ensuring that the entire process is conducted with fairness and impartiality at its core. By doing so, companies can not only comply with the PoSH Act but also create a more respectful and supportive environment for all their employees.

The post Why do companies shy away from the PoSH Act? appeared first on HR Katha.

Now, as appraisals loom, the big question is how the layoffs will affect them and the resulting salary hikes. Will those who kept their jobs feel fortunate and have modest expectations, or will they feel more valued, and expect a higher salary raise?

The answers to these questions are not straightforward and will depend on the employees’ role, function and the sector they work in. Besides these internal factors, several external influences will also impact appraisals in 2023.

To draw any conclusion, it’s important to first evaluate the core reason behind the layoffs in the technology sector.

The layoffs that have occurred over the past six months and are still ongoing are primarily the result of overhiring in the previous year. At times, companies may also resort to staff reductions due to a disparity between their desired goals, industry trends and their capabilities. Another factor that can result in layoffs is automation, where certain roles become redundant.

“Organisations misjudged their numbers and hired more people than they needed, presuming a high level of attrition. However, attrition rates have slowed down, and as a result, organisations now have excess staff,” says a senior HR leader from the IT sector.

“Layoffs are influenced by both internal and external factors. External factors may include the industry, the macroeconomic environment or recessionary pressures. Internal factors are related to the organisation’s product or service line or internal strategy, such as the internal strategy for performance. Employee appraisals or evaluations are used to assess an individual’s performance within the organisation based on the previous year, quarter, or month. They are also used to develop talent for the future,” explains Sailesh Menezes, VP & head HR, Hewlett Packard Enterprise India.

Having said that, there can be some overlaps as well. “In cases where redundancies occur and the organisation is struggling from a performance perspective at a macro level, individual appraisals will have to reflect the organisation’s performance very closely. Not every individual, but overall, the summation or collation of all individual appraisals should match the overall performance of the organisation,”he adds.

Compensation review

Many heads of HR from the technology sector believe that there isn’t always a direct correlation between layoffs and organisational performance management. In that case, will the compensation part of the appraisal process, that is, the salary raise, be affected?

The impact on employee rewards may vary depending on how the organisation has handled performance management throughout the year.

“While Max Life does link separation to productivity, the company is growing and will not be laying off people, especially non-sales employees.”

Shailesh Singh, sr. director & CPO, Max life insurance

Appraisals are meant to evaluate and provide feedback on an employee’s job performance, skills, accomplishments and areas of improvement. The final outcome of the appraisal process is, of course, the compensation review or the salary hike.

Bhuvaneswar Naik, CHRO, Lentra, says, “Unless a company is going through a cash crunch, I don’t think there will be any impact on the appraisals or salary raise.”

He goes on to say, “Good people are to be retained and for that, they need to be paid well,” he insists.

Naik refers to the general industry prediction that the salary increment in 2023 will average around 10.5 per cent across sectors. “Even those who have been laid off for some reason have now been hired by other companies and at a higher pay scale,” he states.

Senior HR leaders are also of the opinion that the layoffs in the technology space will have little impact on the compensation review.

“We will also allocate significant budgets to ensure that we retain and nurture our talent, and demonstrate that we are an employer of choice. This year’s increment is likely to be higher than the previous years, which have seen muted salary increases. We believe this is a positive sign for the industry, and will lead to a correction in entry-level salaries and
expectations.”

Gautam Srivastava, VP-HR, The Leela Palaces, Hotels & Resorts

“It’s not that businesses have slowed down. Rather, their estimations of growth have been way off. Many people thought demand would accelerate, but the reality has been different. While growth is still happening, it’s not happening at the rate that was expected. This is different from situations such as that in the year 2008, when businesses actually did slow down,” an HR pracitioner opines.
Somewhere recession seems to be knocking on the door, especially in the West. Will that impact the compensation in India?

Independent observers seem to be of a different view.

Rituparna Chakraborty, VP & co-founder, Teamlease, and an independent observer of the HR sector, says, “Employees, especially those from the technology sector are already anticipating muted salary hikes and expect the situation to remain the same for the next 18 months”

Another independent observer, Viswanath PS, MD & CEO, Randstad India, has a mixed view. He believes that some employees who have been retained by their organisations may feel a greater sense of responsibility and importance, especially if they know that others have been laid off.

“Employees, especially those from the technology sector are already anticipating muted salary hikes and expect the situation to remain the same for the next 18 months.”

Rituparna Chakraborty, VP & co-founder, Teamlease

“This can stem from a feeling of survivor guilt or a desire to prove their worth to the organisation. On the other hand, some employees may become more humble in their expectations and feel grateful for the job they have in a challenging economic climate. It ultimately depends on the individual’s personality, values and mindset,” says Viswanath.

One needs to take into account that after the pandemic, there was a boom in many industries, but companies’ estimations of future growth have been off. However, this doesn’t
mean that businesses are not making money. In fact, most companies are profitable and are projecting growth, but just not at the levels that were initially anticipated. For instance, if
the IT industry projected double-digit growth for the year, but it turns out to be single-digit growth, it is still considered good growth.

Since companies are still profitable, employees’ salaries are unlikely to be cut. They will continue to pay their employees, despite the discrepancy in initial projections and actual growth

Non-tech sectors

It’s a different world altogether. No one from the non-IT or nontechnology sectors seems to be bothered about any slowdown, forget pay cuts. In fact, people are talking about growth.

Retail

“Appraisals are mostly related to a company’s internal culture and their evaluation of an individual’s past performance and potential. Therefore, it is an integral part of the cultural
fabric of an organisation in terms of the performance-management process,” comments Jacob Jacob, global CHRO, Malabar Group.

In fact, Malabar Group is increasing the number of retail stores, both domestically and internationally, along with the manufacturing capacity.

“In a year, we require to recruit approximately 7500 to 8000 employees across our retail, manufacturing, and other supporting businesses. Considering the number of employees we need and the fact that retail attrition is almost 22 to 23 per cent, we must keep our current management team members together and provide a compelling story for new hires to join our organisation,” says Jacob.

“Manufacturing, energy and pharmaceuticals are absolutely on the upward curve and several industry studies are predicting an average salary raise of 9.5 to 10 per cent, which is few points better than the previous year’s estimate.”

Praveen Purohit, deputy CHRO, Vedanta Resources

Hospitality

Even in hospitality, there is an upswing. Following the COVID-19 outbreak, the hospitality industry saw a significant decrease in business activity, leading many companies to cut salaries and lay off employees. However, since the third wave, the industry has seen a V-shaped recovery, with people starting to return to hotels for leisure, staycations and long weekends. This has led to a different type of customer, and some companies have had to adjust their business strategies accordingly.

Despite the difficult circumstances, some hotel chains in the hospitality sector continued to give their employees salary increments, bonuses and promotions during the pandemic. The Leela was one of these companies, along with a few others, while most of the larger chains cut salaries and laid off employees.

“As the industry continues to recover, there is hope for further growth and expansion, with the potential for salary increments and promotions for employees who demonstrate
exceptional performance,” says Gautam Srivastava VP-HR, The Leela Palaces, Hotels & Resorts.

“We predict that hotels will continue to experience high occupancy rates this year, while the market is on an upward swing. As a result, we anticipate a positive impact on appraisals within the hospitality sector, with an average salary increase of around 10 per cent, based on research reports from leading firms,” he adds.

Srivastava claims that in his organisation, in addition to promotions for high-performing employees, they will also invest heavily in top talent and high potentials, with a focus on
learning and development, as well as career progression.

“Unless a company is going through a cash crunch, I don’t think there will be any impact on the appraisals or salary raise.”

Bhuvaneswar Naik, CHRO, Lentra

“We will also allocate significant budgets for people managers to ensure that we retain and nurture our talent, and demonstrate that we are an employer of choice. This year’s increment is likely to be higher than the previous years, which have seen muted salary increases. We believe this is a positive sign for the industry, and will lead to a correction in entrylevel salaries and expectations,”
he shares.

Srivastava suggests that companies must ring-fence their talent. He anticipates that most hotel chains will have a budget larger than normal, and that this year will bring good increments for hotel employees. According to Srivastava, this is a positive sign and a correction to entry-level salaries and expectations in the hotel industry.

Besides, the hospitality industry will start seeing more incentives being offered to employees, beyond just salaries, this year. This is a trend that has been present in other industries
such as sales and customer service for some time. The incentives in the hospitality industry will be related to FnB service charges, room accreditation, sales, customer service and guest appreciation. The goal is to provide employees with more earning potential in addition to a good working environment.

Manufacturing

Another HR head from a non-tech sector is quite upbeat about the salary increase, and these sectors have remained untouched by layoffs.

“Manufacturing, energy and pharmaceuticals are absolutely on the upward curve and several industry studies are predicting an average salary raise of 9.5 to 10 per cent, which is a few points better than the previous year’s estimate,” says Praveen Purohit, Dy. CHRO, Vedanta Group.

“The first reason for this growth is the focus on infrastructure projects and government support for businesses. The second reason is that businesses are executing their projects and capital expenditure is contributing to the growth agenda,” he adds. Purohit claims that the increased hiring by nontech companies from campuses is also evident of the fact that things are improving.

“The technology market had become overheated and saturated with incentives such as bikes and gold chains being offered to attract talent. This resulted in a correction in the market, stabilising compensation ranges and reducing offer drop-offs.”

Ruhie Pande, CHRO, Godrej capital

Siddhartha Ghosh, CHRO, Adani Wilmar, says, “Despite the various challenges posed by geopolitical instability, ongoing conflicts, rising inflation, and limited spending in rural areas, we have remained committed to our vision. At Adani Wilmar, we are mindful of the signals our actions send to our workforce, and one way we communicate this is through
our appraisal process. We have continued to reward positive behaviours and have not been affected by the recent spate of layoffs. Our priority has always been to make decisions with long term benefits in mind, and we strive to ensure that our employees share this perspective. We are excited to set new goals for the upcoming year and look forward to continuing to support and reward our team members for their contributions.”

BFSI

Layoffs have a different context in the insurance sector. Here, layoffs are primarily driven by nonperformance.

A large number of employees who are not meeting their performance targets are generally put on a performance improvement plan first. This practice is also followed in Max Life, according to Shailesh Singh, sr. director & CPO, Max life insurance. “The company allows them 45 to 60 days to improve their performance, but if they fail to do so, they are
separated from the company. This is how the process works in the sector, and most companies handle it in a similar way,” reveals Singh.

Singh believes that layoffs have had little impact in the insurance sector. “While Max Life does link separation to productivity, the company is growing and will not be laying off people, especially non-sales employees,” he shares.

Who will get the bigger pie?

The merit increase of an employee can indeed be influenced by three factors:

Individual performance: The performance of employees  throughout the year is one of the primary factors that determines whether they deserve a merit increase or not.

“In cases where redundancies occur and the organisation is struggling from a performance perspective at a macro level, individual appraisals will have to reflect the organisation’s
performance very closely. Not every individual, but overall, the summation or collation of all individual appraisals should match the overall performance of the organisation.”

Sailesh Menezes, VP & head HR, HPE India

 

Performance of the organisation: The overall performance of the organisation also plays a role in determining the merit increase of an employee. If the organisation is performing well, it may have more funds to allocate towards employee compensation.

Market or industry movement: The third factor that influences merit increase is the market or industry movement in terms of midpoints and pay ranges. These ranges are often influenced by inflation in the country or region.

“One generally pays for a skill, competence, performance, or potential, and not necessarily on the basis of whether there were layoffs or not. However, if an organisation has laid off people due to poor performance, then it can impact team members’ rewards at the end of the year. This is because, the organisation has not performed well, and that’s why it had to resort to layoffs in the first place,” says Menezes of HPE.

“Talent is indispensable for a company has to grow. In any sector, the purpose of performance discussions and reviews is to focus on the best talents in a company, ensuring their performance is taken care of, and that they are rewarded appropriately.”

Ravi Kumar, CPO, Page Industries

Niche skills

Independent observer, Kamal Karanth, founder, XPheno, believes that the outcome of appraisals will depend on the performance as well as the role and its importance within the company. High performers with niche skills will demand and get more. For instance, however gloomy the market may be in the technology world, people with digital skills such
as cloud, full stack and data are still in great demand.

“If a good full-stack engineer got ten to 15 interview calls from the market every day during the peak time, the numbers would have dropped to four to five calls now. However, the job and role is still in great demand,” says Karanth.

The fact remains that employers are willing to pay more for individuals who possess certain specialised skills that are in high demand. As the technology landscape continues to
evolve rapidly, industries are looking for talent with specific skills to stay competitive. Therefore, it is likely that people with certain skills will continue to command higher salaries. It’s a demand and supply philosophy.

“Appraisals are mostly related to a company’s internal culture and their evaluation of an individual’s past performance and potential. Therefore, it is an integral part of the cultural
fabric of an organisation in terms of the performance management process.”

Jacob Jacob, group CHRO, Malabar Group

Certain skills are more valued because there is a demand from clients. The industry is willing to pay more for skills that are in high demand. This trend of paying a premium for valuable skills has been ongoing for the past few years and is likely to continue.

“I don’t see this trend changing anytime soon, so individuals with better skills can expect to earn higher salaries,” states a senior HR leader from a leading IT company.

Even in manufacturing, Purohit believes that people with unique skills will get the impetus during appraisal. For instance, people who are experts or have knowledge in predictive maintenance, data science, analytics, artificial intelligence and machine learning. Vedanta being a mining company, favours people who come from exploration background during salary appraisals “Companies seem to be more considerate towards such niche skills,” adds Purohit.

The Best Performer

Chakraborty is also of the view that the distribution of the pie will depend on the performance. However, she offers a different perspective. According to her, even when expectations are muted, the pie will not alter. That means, the best performer will get a larger share. The implication of this is that they will feel valued. “The best performers will feel that even if they may not get what they are aspiring for, there’s an acknowledgment of their performance as against someone else who has not performed well,” she explains.

“For those who were not laid off, there is a feeling of survivor guilt or a desire to prove their worth to the organisation. On the other hand, some employees may become more humble in their expectations and feel grateful for the job they have in a challenging economic climate. It ultimately depends on the individual’s personality, values and
mindset.”

Viswanath PS, MD & CEO, Randstad India

Ravi Kumar, sr. president and CPO, Page Industries, is of the belief that the best talent has to be rewarded handsomely, irrespective of the market condition or any other external factors. “Talent is indispensable for a company has to grow. In any sector, the purpose of performance discussions and reviews is to focus on the best talents in a company,
ensuring their performance is taken care of, and that they are rewarded appropriately.”

Retention strategy

Layoffs and attrition are also not interconnected. It’s not as if attrition will go down if layoffs are high in number. There may be some marginal impact on attrition but the number can’t be zero. For instance, despite layoffs, attrition has not gone down drastically or hit single digit. This means, companies will have to give out high increments in order to retain their top talent.

Karanth predicts anything less than a 20 per cent hike will not make the best people stay on. That’s because, if they change jobs, they are likely to get 30 per cent or more.

Mid-level wins

So which level of employee will get the primary attention during appraisals — entry, mid or top level?

“If a good full-stack engineer got ten to 15 interview calls from the market every day during the peak time, the numbers would have dropped to four to five calls now. However, the job and role is still in great demand.”

Kamal Karanth, founder, Xpheno

“Companies usually focus more on the mid- to lower-mid employees and not the junior most. The mid to the lower-mid is the segment which normally has a reasonable amount of experience. The employees in this segment have a good amount of skills, and they’re always in demand. Therefore, usually when the money situation is tight, companies focus on a segment, say between a three to an eight-year kind of a segment,” says a senior HR leader from a leading IT company.

“Focusing on the frontline, midlevel and entry-level employees is essential,” says Srivastava of Leela Hotels.

Mid-level employees run the organisation, and losing experienced and tenured employees creates a knowledge gap that can be difficult to fill. “The transition of knowledge is a significant challenge, so it is crucial to invest in internal talent development and grooming for various roles and levels. This involves spending more money on farming talent internally, providing good salaries, career-development plans, and training managers to handle a multi-generational workforce,” he adds.

“At Adani Wilmar, we are mindful of the signals our actions send to our workforce, and one way we communicate this is through our appraisal process. We have continued to reward positive behaviours and have not been affected by the recent spate of layoffs. Our priority has always been to make decisions with long-term benefits in mind, and we strive to ensure that our employees share this perspective.”

Siddhartha Ghosh, CHRO, Adani Wilmar

 

The Correction

Comparing with that of ‘appraisals 2022’, Chakraborty says, “People have seen the upsides of 2022, and now they should be ready to embrace the lows as well.” She believes the current situation to be like a course correction.

“People will now recalibrate their lives, and their expense outflows in accordance with the appraisal.”

According to Ruhie Pande, CHRO, Godrej Capital, “The technology market has become overheated and saturated with incentives such as bikes and gold chains being offered to attract talent. This resulted in a correction in the market, stabilising compensation ranges and reducing offer drop-offs”.

Pande believes that the market will continue to correct itself over the next two years, leading to equalisation of compensation ranges. However, it is to be noted that the market is currently subdued, and the technology team retention has improved, which is positive for the overall technological advancement of the group.

The post Factors that can affect appraisals in 2023 appeared first on HR Katha.

The age of Industrial Relations (IR) 3.0 is here. Mutual acceptance, harmony, gratitude, and respect for each other have replaced volatility, exploitation, confrontations, conflicts, strikes and lockouts. Both parties — the workers and the management — are now well aware that growth and survival cannot be possible without each supporting the other.

Zubin Palia, chief group HR & IR, Tata Steel, shares an interesting observation.

“Previously, there were three stakeholders in IR — the employer, the unions and the government. It was like a triangle. Now, there are two more stakeholders — the customers and the community. The triangle has now taken the shape of a star, with the new stakeholders playing a significant role in IR.”

“Political influence in IR has reduced over time, which has weakened the power of unions in the country. ”

Rajendra Mehta, group CHRO, Suzlon Group

So what has altered the environment?

Change in Mindset

“The exploitative mindsets are on the way out, giving way to more inclusiveness,” says Raj Velarkar, CHRO, Finolex.

Citing the example of his own company, Velarkar shares that at Finolex, permanent and contractual employees are treated no differently. The latter are entitled to all the benefits at par with the former. “Blue-collared employees are treated much better than they used to be in the past,” Velarkar states.

Liberalisation of Economic Policy

“In the pre-liberalisation era, workers at the shop floor were engaged in collective bargaining, backed by political support nationally or regionally, however, the discussions largely revolved around protecting workers rights, compensation, and benefits. While the collective bargaining exists even now but discussions now are centred around a collective opportunity to build something new and strong, caring for uncertain times, health and wellness, learning and engagement,” explains Rajendra Mehta, group CHRO, Suzlon Group.

More Involvement and Worker Centricity

Today, organisations think of retraining workers and upskilling them to keep them relevant for tomorrow. In fact, the new equation has changed the role of plant HR heads.

“Previously there were three stakeholders in IR — the employer, the unions and the government. Now, there are two more stakeholders — the customers and the community. The triangle has changed shape to a star.”

Zubin Palia, chief group HR & IR, Tata Steel

They are an evolved lot now. Gone are the times when their core responsibility was to deal with conflict. Today, they are more engaged in designing upskilling programmes for workers. “They are the new advocates of workers,” asserts Velarkar. “The interaction of workers and plant HR managers will continue to change, as per future of work, worker and workplace,” concurs Zubin Palia, chief group HR & IR, Tata Steel. “Transactional conversations on leave and HR policies will reduce because they are now available digitally. This will be replaced by more meaningful discussions such as career advancements,” enunciates Palia.

Growth Opportunities

Another landmark change that has been observed is the growth opportunity provided to the workers. In the early days of industrial relations, a worker moving into a staff role was almost impossible. “Organisations, these days, support workmen to acquire digital skills and train them on new technology. Skills upgradation has become an integral approach for ensuing workmen skill remain relevant for future. Best performing workmen are also moved up in staff roles,” points out Mehta.

Many believe that plant HR managers have now become business partners, and that in the coming times, they will need to bring in more flexibility and customisation in terms of HR policies at the plant.

“Plant HR managers will also need to adjust to working with multiple employment models such as gig, permanent workers and fixed-term contracts,” observes Palia.

There is also so much to learn from the best practices in the Industry.

“The exploitative mindsets are on the way out, giving way to more inclusiveness.”

Raj Velarkar, CHRO, Finolex

“The evolving IT services companies in India introduced many new HR practices, thanks to the influence of global and American companies. This brought in significant change, as other employers were also influenced. Back home, the Tatas also brought in some noteworthy changes in IR. They were the first ones to reduce the 12-hour shift to eight hours, which later became a law in the labour codes,” shares Lalit Kar, SVP-HR, Reliance Digital.

Collaborative Unions

Globalisation, along with demographic, environmental and technological changes, has altered the labour markets. As a result, trade unions have lost some relevance and also their ability to organise and service workers.

“I do agree the significance of unions has reduced — collective bargaining remain active, when workmen interests are not protected,” says Mehta.

“In general, the Influence of unions is weakening because they themselves have not changed. Besides, the new-age workforce is more aware and capable of fighting for their rights on their own. They do not need a third party to do it for them,” states Palia.

To stay relevant, trade unions need a complete overhaul. They also need to work on their communication skills and build a connect with the workers.

There are several reasons why the importance of unions has gone downhill.

One, employers have become more empathetic towards the workers. Workers themselves have also realised that they can’t take undue advantage of the situation, and  that strikes are no answer when it comes to raising their demands. This altered relationship between the employer and the worker has reduced the need for any third-party negotiators. This has, eventually, affected the role of the trade unions.

“Workers have come to realise that unions are just like middlemen working for their own interest, and therefore, they don’t want them either,” observes Kar of Reliance Digital.

“Highly-skilled people tend to migrate to different companies and save themselves from an
exploitative employer, which has reduced the need for unions.”

Lalit Kar, SVP HR, Reliance Digital 

“When people are emotionally connected with the organisation, the sense of aggressiveness takes a back seat. Even the political influence in IR has reduced over time, which has reduced the power of unions in the country,” concurs Mehta of Welspun.

Technology Wave

Technology has played a part in changing the power equation.

Automation and technology on the shop floor have upgraded the overall skill sets. This means, more highly skilled workers are required.

“Whenever people become highly skilled, they tend to migrate to different companies. Since they are not forced to stay on with an exploitative employer, the need for unions is also reduced,’ says Kar rightly.

Good Deed

An increase in CSR activities has also played a role in easing conflicts. Workers and trade union leaders feel that businesses and organisations do not just think about themselves, but also about the larger society.

“When organisations give back to society through various initiatives including that of CSR, there is a positive effect on relations, and each of these positive acts, help build a collaborative opportunity and reduces stress of collective
bargaining,” says Mehta.

Impact on Unions

Prince Augustine, senior HR leader and former HR head of Mahindra & Mahindra, is of the opinion that though a lot has changed over the past few decades in terms of IR, the basics remain the same.

“Although the government is trying to bring in reforms, ultimately it all depends on the trade unions, as it is up to them to allow or disallow these changes,” says Augustine, adding that it is too early to write off the unions. “The negotiating power of the trade unions may have come down significantly, but that doesn’t mean unions have lost their influence. An organisation that thinks so, is trying to play with fire,” he asserts.

“If an organisation wants to shut down a plant, for instance, will the union leaders agree?” he questions.

“Larger companies can withstand strikes for longer period, but the workers can’t because they have to pay their bills. On the contrary, in the SMEs and MSMEs, neither the owners nor the workers can afford to stop production for a long period.”

Prince Augustine, senior HR leader & former HR head, Mahindra & Mahindra

It is, hence proved that unions have not lost their influence completely. The point is that they don’t have an issue at hand for which to use their influence. After all, wages have gone up in large corporations, employers are empathetic and there are structured processes to resolve issues.

“What has changed is that unions have become more collaborative. Companies have educated the unions on various matters and have collectively resolved issues,” says Augustine.

“At Tata Steel, unions are still respected. We work collaboratively with the unions, and this bond and collaborative attitude have kept the relevance of unions alive inside Tata Steel. Also, the unions have proactively brought young people forward to run them,” shares Palia.

“However, unions outside Tata Steel will have to change themselves, if they still want to be relevant in today’s time,” he advises.

What has changed in the SME and MSME story?

Industrial relations has improved in the SME and MSME sectors as well. However, the pace of growth is not at par with the corporates or larger organisations.

“On a scale of 10, I would say, the large corporations are at 10 while the MSMEs or SMEs would be at 4, in terms of IR,” says Augustine. It all depends on the establishment owners and how they treat their workers, when it comes to IR amongst MSMEs and SMEs.

“Some owners are very transactional, while others are philanthropic. Some still believe in minimum wages, while some are very down to earth and grounded. The last group touches the nerves of their workers better than some of the large organisations,” shares Augustine.

Another senior HR leader says, “In MSMEs and SMEs, owners are opportunistically empathetic towards workers. They are transactionally connected to their workers with no real emotional bonds.”

The HR leader also points out some malpractices. “Corruption still exists, although no MSME or SME will agree or admit to it. The owners pay kickbacks to union leaders – monthly or annually – and in return, they ensure that they do not create any trouble for the owners, even if the workers are being exploited,” the HR leader reveals.

“In a small setup, there is more transparency in the relationship between employers and workers. They know how much we are producing, the cost of production and how much we are selling. So they are well aware of how much we can afford to pay.”

Ajit Inamdar, Owner, New Aniket Packaging

 

“The malpractices of mass exploitation, which existed maybe in the 18th and 19th centuries, and which led to the formation of unions in the first place, do not exist anymore today. But this is only in case of the organised sector. In the unorganised sector and amongst the SMEs and MSMEs, exploitation persists at some level,” opines Palia.

There is a vast difference in wages between large corporates, and SME & MSME companies. That is why, large companies are able to keep labour problems at bay.

Palia reveals, “At Tata Steel, all our permanent workers and employees are paid well above the minimum wages and are governed by Long Term Settlements signed with our Union.”

For SMEs and MSMEs to keep problems at bay, the owners have to directly interact with the union leaders and keep them in good humour.

“The larger companies can withstand strikes for longer periods, but the workers can’t because they have to pay their bills. On the contrary, in the SMEs and MSMEs, neither the owners nor the workers can afford to stop production for a long period,” says Augustine pertinently.

In SMEs and MSMEs, the power dynamics are pretty much balanced. It’s not that the unions completely ignore the plight of workers or give them a cold shoulder. They do protest if conditions such as minimum wages, welfare schemes, or safe working conditions are not met. However, they also refrain from creating unnecessary demands.

The victims in the entire scenario, are the casual workers or contract labourers. “The unions play around with these poor fellows. The contract and migrant workers also prefer to keep mum as long as they get the jobs and their wages,” admits Augustine.

Ajit Inamdar, owner of an MSME company, New Aniket Packaging, has a different take. “Managing people in a small setup is not any different from that of the larger corporates. There will be no issues till the time one is paying the minimum wages, and on time.” He believes that in a small setup like his, there is more transparency in the relationship between employers and workers. “They know how much we are producing, the cost of production and how much we are selling our products in the market. So they are well aware of how much we can afford to pay,” reasons Inamdar.

“Even during COVID-19, we did not cut any wages. I have been in this business for more than 35 years, and some workers have been working with me since the very beginning. I myself have struggled my way up in the business. Having seen humble days myself, I never exploit my workers. Even if I earn a few ‘rupees’ less, I will never cut the wages of my workers,” claims Inamdar.

Even the strikes and lockouts in the SME and MSME sector have reduced considerably, according to Inamdar.

This has happened because of more transparency. Previously, most employers in the SME sector tended to extract more from the workers and pay them less. “Nowadays, talent competition is high. Even SMEs cannot afford to they deserve, because workers have the option to migrate from one company to another, for better pay,” says Inamdar.
Unlike in the past, workers today are highly aware of their rights. Smartphones have made a difference. They do not need the support of unions to raise issues for them.

What’s next?

Two things that are expected to change IR or the employer-worker relationship further are automation and the yet-to-be-implemented labour codes.

Impact of Automation

Some believe automation is just knocking on the door, while others are of the opinion that it will take a few years for automation to take over completely.

“Many jobs are at stake. I believe, the youngsters will get jobs and the older people will find it difficult to work in an upskilled environment. They may take up early retirement and they will be given separation offers,” predicts Augustine.

“Automation is not new. We began automating three years ago, transforming from industry 2.0 to 3.0, but now the pace of transformation has increased,” says Palia.

“We recognised early on that workers will need reskilling in order to stay relevant. Therefore, we created a platform to reskill and upskill our workers for the new and upcoming jobs,” says Palia.

Tata steel also identified the grey areas – the jobs that would become obsolete or be eliminated in a few years.

For instance, in a steel plant, there would be a person to climb up the large chimneys, just to measure the temperature. But now, with digital metres available, this role has become redundant.

However, redundancy doesn’t always imply a loss of jobs. Companies such as Tata Steel do everything to find an alternative. It puts redundant workers on a reskilling path and make them useful in some other areas. It has reskilling centres where it re-deploys the talent in other roles.

“We have a unique Job for Job (JFJ) Scheme wherein, we take the responsibility to skill and train young employee wards into new future roles and employ them without any interviews. This is a win-win for both the company and the ex-employee who is opting for JJF,” shares Palia

In case the employees concerned fail to reskill themselves, the Company offers a voluntary separation scheme, where the workers get paid their last-drawn dearness allowance, month on month, till the age of 60. During this period, medical benefits are provided just as any other regular employee. Besides, these employees are allowed to stay in a company-allotted house for up to six years.

The other scheme available allows such employees to swap jobs with their children in case they have already matriculated. “We take the responsibility to skill and train these youngsters into new future roles without any interviews. This is a win-win for us also,” shares Palia.

Impact of the New Labour Codes

The labour codes are also expected to bring in a series of changes in IR. Many HR practitioners and SME owners are concerned that the new labour codes will increase the labour cost.  For instance, the new labour codes state that the endurance allowance has to be 50 per cent of the monthly gross salary.

“The overall cost of the company will go up. Apart from the gratuity that has to be paid, there are a few more components which will get added to the fixed salary of the employee and eventually all of these will increase the contribution of the company towards provident fund,” shares Velarkar of Finolex

“I will have to spend more on compliance such as fire safety and other safety hazards in the factories. That will increase the cost,” points out Inamdar. However, larger organisations feel the new labour codes have simplified that compliance and reduced the paperwork required for the same. It is expected to save a lot of quality time for the compliance person in the company. Monitoring also becomes easier.

The new labour codes also prescribe keeping the minimum gratuity limit at Rs 20 lakh. However, many of the large organisations aren’t worried about the cost because they already had such worker-friendly practices in place.

“We don’t limit ourselves to Rs 20 lakh. If someone’s gratuity accumulates at Rs 50 Lakh, we pay it. That is why, we feel the new codes will not impact our labour cost,” claims Palia.

The new labour codes also promise to reduce exploitation of labour in India.

“As per the new codes, companies will have to pay gratuity to a fixed term employee even if he/she has completed one year and this will wipe out a lot of wrong practices,” opines Velarkar.

“Earlier, companies would keep workers on fixed term contract for four and a half years and then cancel the contract and make a new contract because the minimum period of employment for gratuity was five years,” he adds.

The new labour codes will also increase the flexibility of the employment model which is again a welcome move for IR.

“At Tata Steel, we were looking for a flexible model for employment where we can engage talent in some jobs which are not permanent, for a period of time. And we would like to get the best of the talent. The codes come with a social security net for these workers, which is a win-win for both of us. It will increase the employment opportunities and ensure a flexible employment generation in the system,” adds Palia.

However, that’s only one side of the story. The situation also becomes complex for mega organisations, even for the likes of Tata Steel.

“Not all states have rules for a recognition of union. For instance, the state of Jharkhand, has no such rules. There are multiple unions but no straight rules pertaining to recognition,” admits Palia of Tata Steel.

However, the new labour codes set a clear guideline on how companies can identify a recognised union in a multi-union setup. The labour codes have also increased the tenure of unions from three years to five, which again is a positive movement.

“Some amount of stability is required. In a three-year tenure, the first six months go into being in the euphoria of winning the elections and the last six months go into the preparation of electing the new union. Therefore, the management had very less time to engage with the elected union and have a discussion on meaningful employee-employer  issues. The extension of the tenure increases the stability of unions,” states Palia.

There is, also, some part of the labour codes that can make the unions a little apprehensive.

“Fixed Term Contract or FTC is a good move. However, there are some apprehensions that it can get misused. That is, resources can be churned as per cost arbitrage in the garb of putting permanent jobs into FTCs,” says Palia.

What could also turn out to be a concern for unions is the clause in the new labour codes which allows organisations of a certain size to close down factories without any prior notice.

The other aspect of the new labour codes which will force companies to improve IR is that the new labour codes have increased penalties for repeat violators of labour laws. “That is why, there will be more emphasis on complying with labour laws,” believe many HR practitioners.

With the new labour codes, the role of the plant HR head also change as less time will be devoted to transactional activities and more time to meaningful engagements.

This article first appeared in the December, 2022 Issue of HRKatha Print Magazine 

The post The age of Collaborative IR appeared first on HR Katha.

This is because, earlier, only the knowledge-based industries considered their people to be their assets. Now, even other sectors are moving towards a knowledge-based economy. This has brought about a change in mindset, and of course, spends on people and HR.

In addition to salaries and wages, a typical HR budget now allocates funds for hiring, benefits, talent management, learning and development, training, succession planning, workforce engagement and employee-wellness planning.

It’s true that a lion’s share — almost 70-80 per cent — of the HR budget still goes into salaries and wages. However, there is a growing focus on other pockets — such as employee engagement, learning and development (L&D), as well as management of HR operations, which includes subscription to HR Management Systems (HRMS)— needless to say that spends are growing in these areas.

“Earlier business leaders such as the CFOs or the CEOs were less generous while allocating HR budget”

Suresh Bose, CHRO, Jindal Stainless

In fact, most of the HR heads that HRKatha spoke with for this story agreed that their budgets for L&D and employee engagement have gone up post the pandemic.

Even a Gartner study had predicted the same. As per the study, around two thirds of HR leaders planned to increase their budgets in 2022, which is almost twice the number in 2021.

So how is India Inc. planning its HR budget for this financial year? We are already in the second quarter of this fiscal year.

Usually, the HR Budget is derived on the basis of total revenue, operational cost or just cost per employee.

At a macro level, it can be stated that organisations, with a higher average HR cost, see HR as a strategic enabler that can improve workforce productivity levels, and thereby,
business performance.

“In a capital intensive industry, the cost is more on the side of the business than the people. In a people centric industry, such as IT and technology, the people cost is almost 60 per cent of the total cost of the company. In consultancy, the people cost is even higher and touches 75 per cent,” shares Jayant Kumar, joint president – HR, Adani Ports and SEZ.

“The budget for rewards & recognition and employee engagement has increased at Lendingkart”

Asit Kumar, CHRO, Lendingkart

At the micro level, however, HR budgets are dependent on several other factors such as the stage the company is in, its requirements, its business growth strategy for the year, and so on.

Ramesh Mitragotri, CHRO, Ultratech Cements, shares with HRKatha that for his company, the HR budget is the culmination of the blended approach of the business strategy and the HR agenda.

“We look at the activities of the previous year, and decide on the flow for the current year,” he reveals.

For instance, when the HRMS technology was introduced in the market, the spends increased in that area. Similarly, during and even post the pandemic, travel cost has come down whether for business or hiring. Psychometric tools have been introduced for interviewing. All these external factors influence the HR budgets for the year.

The FMCG company, Emami has a slightly different approach. “We look at the financial, people and functional scorecard before deciding on the amount. However, before finalising the budget, we go to the far end of the cost in terms of manpower planning, be it new hires or attrition. In the process, we indulge in detailed chats with all functional heads to understand their requirements.”

SG Analytics, a company, which offers global insights and market research services, has stopped following a straight- jacketed approach while budgeting for its HR. Earlier, the Company used to allocate individual budgets, per person. Now, it is as per requirements. The objective is to provide a better experience to all the employees, whether working from the office or remotely.

Poonawalla Fincorp follows a totally different model. It calculates the HR budget on the basis of the ratio of the operational cost. The Company follows a zero-based approach to allocate budgets rather than an incremental approach.

“We look at the activities of the previous year, and decide on the flow for the current year”

Ramesh Mitragotri, CHRO, Ultratech Cements

“Some companies refer to the previous year’s budget and increase one to two per cent in each area.

At Poonawalla Fincorp, every bucket area starts from zero. We allocate the budget for each area as per the business strategy and needs of the company,” explains Manish Chaudhari.

However it’s not always about the strategy. It’s also about power struggle. HR folk also need to fight it out to get their budgets increased.

“In companies where the HR head is not strong enough vis-à-vis others in the leadership team, the team may not get a sufficient budget for HR, as others will try to dictate terms,” shares a senior HR leader.

“Earlier, business leaders such as the CFOs or the CEOs were less generous while allocating HR budget,” concurs Suresh Bose, CHRO, Jindal Stainless.

“A general formula was followed. As a thumb rule, two to three per cent of the sales revenue was the HR budget,” he recalls. Not much thought was given to the HR strategy.

“In a capital intensive industry, the cost is more on the side of the business than the people. In a people centric industry, the people cost is almost 60 per cent of the total cost of the company. In consultancy, the people cost is even higher and touches 75 per cent”

Jayant Kumar, joint president – HR, Adani Ports and SEZ

However, now things have changed for the better. Companies are willing to do everything for their top performers that form about 20 per cent of the total workforce. They give them hefty increments and even double promotions.

“The importance of people in an organisation has increased the impetus to the HR budget,” shares Chaudhari.

Kumar of Adani Ports & SEZ, however, differs. “I don’t think the HR budget has gained more prominence now. Every function in an organisation is important and has a specific role. If one is building plans as part of the HR strategy wherein the intern gives returns, then the business will be happy to allocate more budget for the same,” he enunciates.

SO WHAT’S IN STORE FOR FY 2023?

MAHINDRA AUTO

The company has been focussing on EV technology, and that’s where the HR budget is being spent.

“The real increase in HR cost is because we have to acquire talent in niche areas, such as EV technology and embedded software in EV vehicles. In this segment, there is a limited talent pool and the number of players in the market is increasing day by day,” says Manish Sinha, CHRO, Mahindra & Mahindra, Automotive Business.

Not just Mahindra Auto, but the entire Mahindra Group is now scouting for a new learning management system. While the learning system and the budget are integrated within the Group, there has been an increase in L&D budget at the Group level.

“The real increase in HR cost at Mahindra Auto is because we need to acquire talent in niche areas”

Manish Sinha, CHRO, Mahindra & Mahindra, Automotive Business

At Mahindra Auto, the budget for employee engagement has also increased by 25 per cent. The Company has introduced new initiatives. “Since people have started coming back to the office after remote working, engagement is a necessity,” asserts Sinha.

ULTRATECH CEMENT

The HR budget has been increasing at the rate of five to six per cent year-on-year. The Company is now spending on the safety and wellness of employees.

In L&D, the budget has not increased, but the Company has altered its learning strategy, and newer learning tools and practices are being adopted.

Budget on employee engagement has gone up from what it was during the lockdown. The spend on engagement is at par with prepandemic levels, if not more. Budgeting for HR is based on activities – the largest section of the pie, post salary wages and insurance, goes to learning followed by employee engagement. Cost of hiring or recruitment processes comes in third.

ADANI PORTS & SEZ

The focus of this year’s budget is to get more out of less. Besides, there is increased emphasis on building team capabilities and developing talent in niche areas, such as cybersecurity and data protection.

“There has been an increase in the budget for insurance and medical benefits by 200 to 300 per cent in the last three years”

Kavita Singh, CHRO, United Breweries

The annual budget is calculated as the direct derivative of the business plans and as per ratios allocated for each stream. This year, the nonsalary part of the HR budget has increased manifold, as activities have increased.

Adani Ports’ annual HR budget is over Rs 400 crore.

Around 80 per cent of it goes into salaries, and 10 per cent in nonsalary expenses. Around 4 per cent is spent on employee wellness, 3 per cent on HR technology and the remaining 3 per cent on HR operations.

EMAMI

At Emami, the HR Budget is allocated based on the brands. Depending on the numbers the company wants to achieve for each brand, financial, people and functional scorecards are analysed. Opinion is sought from functional heads and manpower requirements are mapped for each function and brand.

The manpower budget, which includes salaries, wages, recruitment process cost and onboarding cost, is generally 10 per cent of the total net sales.

The other HR budget, which includes people engagement cost, learning and development and HR operations including all subscriptions to HRMS, is just 1 per cent of the net sales. The largest share of this budget goes into learning and development, followed by engagement.

The L&D budget has been doubled this fiscal. Upskilling of the workforce is high on the agenda.

“Even though salary continues to be the biggest component, attention is increasingly being given to skilling, communication, rewards and technology”

Rajorshi Ganguli, global head HR, Alkem Laboratories

UNITED BREWERIES

The HR Budget is based on job activities, projects, external orientation and training.

The larger part of the budget, in the range of 70-80 per cent, goes into employee cost, including fixed salaries, wages and other variables.

“There has been an increase in the budget for insurance and medical benefits by 200 to 300 per cent in the last three years,” says Kavita Singh ,CHRO, United Breweries.

JINDAL STAINLESS

The budget for the last three years and the current scenario are evaluated before formulating the HR Budget. Department wise KPIs and KRAs are aligned to decide on the manpower requirement, and an organisation chart is created for succession planning.

Only then the total cost is calculated and the budget is allocated for each stream, be it learning, engagement, hiring or any other.

The data collection from each function starts in December, and the HR budget is presented first in January. There is a second presentation in February, and the final presentation is done in March. In addition, there is a review done month on month to monitor whether everything is moving as per the plan. Based on these reviews, an incremental budget is also approved.

“Earlier, salary was a major part of the overall HR budget. Now, however, we are looking at giving a better employee experience across the employee life cycle and that can be done with new-age tools and technology in HR”

Kiran Bala, chief people officer, SG Analytics

In terms of priority, talent management comes first, followed by talent acquisition and employee engagement.

“Our HR budget was about 2.9 per cent to the ratio of our sales turnover three year back. Last year it was 2.6 per cent and now it is 1.8 per cent of the sales turnover. It has decreased since the sales volume has increased, which indicates increased productivity,” says Suresh Bose, CHRO, Jindal Stainless.

SG ANALYTICS

The focus of the HR budget is primarily on talent acquisition, skill development and building capabilities. The Company is working on digitisation of HR and learning processes. Simple HRMS and LMS platforms have become inadequate as more people are working remotely.

The Company plans to invest heavily on HR technology and tools, and integration of HR analytics with it.

“Earlier, salary was a major part of the overall HR budget. Now, however, we are looking at giving a better employee experience across the employee life cycle and that can be done with new-age tools and technology in HR,” says Kiran Bala, chief people officer, SG Analytics.

Employee engagement and L&D costs have also increased as compared to last year.

“Some companies refer to the previous year’s budget and increase one to two percent in each area. At Poonawala Fincorp, every bucket area starts from zero”

Manish Chaudhari, president & chief of staff, Poonawalla Fincorp

ALKEM LABORATORIES

There is no major change in HR budget. Salary cost takes away the lion’s share, as 70 per cent of its workforce comprises sales professionals. Even though salary continues to be the biggest component, attention is increasingly being given to skilling, communication, rewards and HR technology.

LENDINGKART

Adopting a holistic approach to budgeting for HR, the Company considers all the components such as recruitment, retention, learning, engagement and operations.

The rewards and recognition budget is kept separate from the employee engagement budget, and is calculated per employee. There has been an increase in spends in these two categories.

The firm has subscribed to a learning-management system and other HRMS tools and services such as legal compliance, background verification agencies as well as PF processing agencies.

Annual HR budget is around Rs 10-12 Cr.

“Before finalising the budget, we go to the last end of the cost in terms of manpower planning, be it new hires or attrition. In the process, we indulge in detailed chats with all functional heads to understand their requirements”

Tuhin Biswas,, CHRO, Emami

POONAWALLA FINCORP

The Company aims to invest around 12 per cent of its entire HR budget on learning and development, since it is going through a digital transformation process.

As per Chaudhari, this is the first full year for the Company, since the last two years have been disrupted by the COVID-19 pandemic. That is why, the L&D budget has been increased by 18 20 per cent, and the budget for employee engagement has been increased 1.5 times.

Employee engagement takes away 10-12 per cent of the total HR budget, as new employees have joined. There is a separate budget for employee wellness and for sustaining the culture of the organisation, which take away 9 per cent each.

Salary and manpower accounts for the biggest share, that is, 60 per cent of the pie.

(This story was first published in HRKatha magazine)

The post How India Inc. Plans its HR Budget appeared first on HR Katha.

Now, the CEO and the CFO are teaming up with the CHRO to transform their company into a talent first organisation. Chief executive officers and leaders at talent driven companies are as focused on talent as they are on strategy and finance.
They make talent considerations an integral part of every major strategic decision.

The pandemic followed by the great resignation and talent shortage has taught organisations that people are their biggest asset, which is why the CHRO or his/her equivalent is now a part of this super team.

“The CEO can play a more pragmatic and gradual role in this trio. Only then the team of three will invest in lifting up the human capital, in talent and skill development, and create a superior culture in the organisation”

Shailesh Singh, chief people officer, Max Life Insurance

According to a research by SHRM, two-thirds of both CEOs and CHROs said the frequency and depth of the conversation around human capital have increased in light of the social events that occurred in 2020. Three out of four CEOs also said they look to their HR chiefs for views on business strategy and operational issues planning.

It was a different picture prior to the pandemic. According to a study by McKinsey and the Conference Board in 2015, CEOs worldwide considered human capital as a top challenge, and they ranked HR as only the eighth or ninth most important function in a company.

How does the trinity work?

The CEO, CFO and CHRO are now part of a strategic club, where the CEO’s role is to define and articulate the company strategy.

The chief financial officer (CFO) oversees the financial capital and resources to ensure that strategy can be funded profitably. And now, the CHRO is on board to translate the strategy to internal and external stakeholders through people and change management.

According to Norman Broadbent, a leadership acquisition and advisory services company, it’s time for HR to take the same leap that the finance function has taken in recent decades, and become a true partner to the CEO. Just as the CFO helps the CEO lead the business by raising and allocating financial resources, the CHRO should help the CEO by building and assigning talent, especially key people and future leaders.

“The relationship or bonding between the CFO and CHRO defines whether the company considers employees as a cost or an asset”

Sunil Singh, CHRO, Stellar Value Chain

“The CEO should create a triumvirate at the top of the corporation that includes both the CFO and the CHRO. Forming such a team is the single best way to link financial numbers with the people who produce them,” advises management guru Ram Charan.

Many CEOs want their CHROs to focus on the broader picture and not be too involved in the day-today activities. Now, even for that, the CEO needs to work closely with the CHRO and elevate the latter to a more strategic role.

Additionally, the CEO’s role is also to keep a balance between the CFO and the CHRO as both try to protect the organisation’s interests, but represent distinct stakeholders in the ecosystem.

This can create a tension between the two, and the CEO’s role is to ensure that this remains a creative tension and not a dysfunctional one.

Shailesh Singh, CHRO, Max Life Insurance, says, “I have seen many CEOs who prefer a myopic view of things. They want results here and now, and are ready to compromise on the talent and people agenda.

In the process, they incline other leaders to follow short-term goals and strategies.”

“Instead, the CEO can play a more pragmatic and gradual role in this trio. Only then the team of three will invest in lifting up the human capital, in talent and skill development, and create a superior culture in the organisation,” he adds.

Another important role of the CEO of a talent-first organisation is to help the board see talent as a value creator, and focus on two forms of TSR — not just total shareholder return, but also talent, strategy and risk.

“I and my CHRO keep reviewing the organisational structures to try and find various synergies between businesses. This helps reduce cost and enhance efficiency”

Sanjay Gupta, CFO, Mother Dairy

Why is CFO-CHRO bonding important?

It’s true that all functional leaders or CXO need to be in sync with each other to drive better value in the company. So, why the emphasis on CFOs being better partners to CHROs?

Just as how financial allocation is important to drive business results, talent allocation goes hand in hand.

A company where the CFO and CHRO are in sync, will not turn to personnel challenges after evaluating financial results or formulating business strategies. Chief financial officers guide and grow profits, while CHROs guide and grow teams — both are vital for strategic growth. For instance, when a company is planning to acquire a another company, the two will discuss whether they have the right set of leaders and people who can crack the deal.

Another example could be of a company, which is planning to open a new business or launch a new product. In this case, the CFO and CHRO will formuldate a strategy, discussing not only the capital allocation required to make it a successful project but also the hiring of new teams for the business.

“The relationship or bonding between the CFO and CHRO defines whether the company considers employees as a cost or an asset,” says Sunil Singh, CHRO, Stellar Value Chain.

What do CFOs think of this relationship?

Traditional CFOs tend to restrict themselves to budget, cost, financials and more of short-term thinking.

However, the pragmatic ones are different.

“They challenge HR in a certain way, to have certain goals. They are very open to spending more on hiring larger teams or creating new roles,” says Singh of Max Life Insurance.

Many CFOs also have deep understanding of the design of the HR programme. They achieve the end goal. “We ensure we have the right milestones and motivators to make it a long-run success,” says Hitesh Vaid, CFO, Cairn Oil and Gas.

“May HR initiatives are designed by the HR team. Initiating and designing a programme is one part, but conveying that idea into a ‘dollar’ figure is our job. Quite often, people may find it difficult to convert such ideas and make them commercially viable. This is where we partner with the CHRO and make it possible”

Hitesh Vaid, CFO, Cairn Oil & Gas

He believes that talent allocation and capital allocation have to go hand in hand in any sector.

“Many HR initiatives are designed by the HR team. Initiating and designing a programme is one part, but converting that idea into a ‘dollar’ figure is our job. Quite often, people may find it difficult to convert such ideas and make them commercially viable. This is where we partner with the CHRO and make it possible,” enunciates Vaid.

“In our industry, talent is the most important thing. Since we are in the Oil & Gas industry, our work is to first find oil, and then make it commercial. This means, we have people with different aptitudes, all requiring different rewards as well. That is why, I and our CHRO collectively design the performance metrics. It is very important to evaluate whether someone’s 5 per cent extra effort is more than someone else’s 15 per cent extra effort, and reward them accordingly,” explains Vaid.

The CHRO’s role is no longer restricted to designing employee programmes and initiatives. It also includes helping the CFO reduce costs.

As Sanjay Gupta, CFO, Mother Dairy, says, “We are a multi-business company. We have milk and dairy products, and also deal in oil and horticulture products. Though there are separate marketing and MIS teams for each business or vertical, we constantly keep reviewing to try and find synergies between various functions across these businesses, for instance, identifying whether one person can manage two or more verticals. We now have a centralised payment system, which means less manpower, reduced cost and more efficiency. All this wouldn’t have been possible, if we hadn’t teamed up with the CHRO.”

HR plays a role in deciding business partners. For instance, Cairn Oil & Gas works with many business partners to procure goods, and it prefers to work with companies that have the skin in the game and are aligned with them. That is why, the Company ensures that its partners also have the right set of people.

“The commercial team can do all the negotiation, but the HR ensures that the business partners have the right set of people, as they are the ones who will run our operations,” points out Vaid.

“Our industry is highly regulated and there are strict safety norms. Therefore, I and our CHRO engage with our partners together. We make site visits together too. This is done so that our partners also get the message and there is no misalignment,”shares Vaid.

Succession planning and internal mobility are other areas where the CFO and the CHRO work together. Again, this helps save costs. Insights from the CHRO can help retain the top talent and save on expensive replacements.

Gupta of Mother Dairy says, “Succession planning is mostly commercially viable. Usually, when we promote someone internally, it keeps the morale of the employees high and we also save money as external resources are always more expensive.” mentions Gupta.

“Together, we evaluate the number and decide whether we should hire someone from the market or promote someone internally,” he adds.

McGraw Hill, the American publishing and educational services company was getting punished by Wall Street as the reputation of its S&P ratings services business was tarnished during the financial crisis of 2010. The investors observed that there was no synergy between the S&P business and other assets of the Company. The then CEO, Terry MacGraw, relied on the CHRO and the CFO, namely John Berisford and Jack Callahan, both newly appointed, to evaluate the problems of the company as outsiders, and advise the CEO on how to unlock the untapped value of the Company. After evaluating and meeting constantly, Berisford and Callahan identified some paternalistic practices which fostered bureaucracy at the expense of innovation. Multiple deliberations later, they both suggested McGraw to separate the Company’s S&P business and education and media business into two companies. They also suggested selling off other assets that did not fit. In this case, while Callahan obtained the facts, Berisford figured the human equation, and together with McGraw they arrived at holistic solutions. In 2018, while the education company was privately held, the market cap of S&P was four times higher than the value of McGraw-Hill in 2010, after Berisford and Callahan joined.

What do CHROs want from this relationship?

People allocation is as important as financial allocation. Chief financial officers know how to manage budgets, but they may not have the experience of allocating HR resources beyond hiring.

Flexibility from CFOs is what CHROs wish for. Chief human resource officers need to be given a budget and should be able to implement change as needed to improve the organisation, without always securing permission beforehand.

“A CFO will have to have a talent first mindset, because generally, it is seen that whenever there is austerity, the CFO tries to cut the budget for training or the people agenda. This is like an egg and chicken story — as we bring talent, they bring business. The first thing they will do is stop campus engagement. If the CFOs understand the HR and have a broader outlook, they will not do that”

Pradyumna Pandey, CHRO, Mother Dairy

For instance, CHROs should be empowered to introduce free or low-cost benefits to employees without seeking permission every time. This will speed up the benefit approval and implementation time, allowing the CHROs to shape the employee benefits package better.

“Some CFOs are very rigid — especially when it comes to allocating budget. If a CHRO has decided to spend less on bucket A and put that extra amount in bucket B, many CFOs may not allow that to happen, which is not right,” says Singh of Max Life Insurance.

“A CFO will have to have a talent first mindset, because generally, it is seen that whenever there is austerity, the CFO tries to cut the budget for training or the people agenda. This is like an egg and chicken story — as we bring talent, they bring business. The first thing they will do is stop campus engagement. If the CFOs understand the HR and have a broader outlook, they will not do that,” says Pradyumna Pandey, CHRO, Mother Dairy.

Also seen as custodians of financial processes, CFOs drive the audit function. If they build processes with the mindset that everyone in the organisation is only there to make money rather than trusting their judgement, problems arise,” says Singh from Stellar Value Chain.

“On the other hand, if CFOs build processes which foster trust, and people feel valued and trusted, talent will prosper,” adds Singh.

According to him, in some places, CFOs consider the HR as a cost centre. That’s where progressive ideas are turned down. “I have also seen CFOs who are more like HR professionals and very much involved in making the organisation a talent first company,” admits Singh from Stellar Value Chain.

What do CHROs need to do?

The CHRO of a talent first organisation need to be a great business person, and not just great people’s person.

The CHRO should be able to diagnose and predict with the help of market intelligence gathered through head-hunters, external hires from other companies and suppliers that will add value to the business. For instance, he/she should be able to say which competitor is planning to hire which CXO, and that could have business impact.

The CHRO should also have the ability to diagnose any gaps in collaboration between different teams, and whether the teams are leading innovations and contributing to business.

However, it’s easier said than done. The relationship between the trio, especially between the counterparts — the CFO and the CHRO —will not develop overnight. There will be some bumpy patches along the way, but the benefits are clear.

The story first appeared in the HRKatha print magazine 

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Break with the past

In 2020, most companies were in survival mode. The pandemic had hit all of a sudden, and companies were busy ensuring business continuity. The challenge was how to stay afloat in those difficult times. In 2021, there was another massive disruption. The market dynamics were changing very fast, and companies realised that they needed to develop future capabilities to quickly adapt to this change.

“What I can foresee is that for the next two-three years, availability of good talent and ability to retain talent will be a major challenge for many companies across sectors”

SV Nathan, chief talent officer, Deloitte

Future capabilities needed new skills and talent, which created a sudden surge of talent requirement. And when there is a sudden demand in the market, shortage is bound to happen. SV Nathan, chief talent officer, Deloitte, opines, “What I can foresee is that for the next two three-years, availability of good talent and ability to retain talent will be a major challenge for many companies across sectors.” The fluctuations in the last two years have, in fact, introduced a plethora of challenges that businesses may not have necessarily faced before. These challenges, and hence, the subsequent shifts in businesses primarily dictated the way industries, and thus, organisations, shifted their focus when it came to their workforces. These shifts in the talent landscape across industries are essential to ascertain what kind of talent requirements industries are facing at the moment and what the focus could be in the near future. All of these are forcing companies to restructure their talent strategy.

Richard Lobo, executive vice president & head-HR, Infosys, elaborates that today’s talent atmosphere will require organisations to account for multiple facets into their strategies. “Today, the pursuit for talent is as competitive as ever, led by a growing skills shortage, advancing technologies, generational shifts and evolving dynamics around the nature of work. Organisations, therefore, will need to invest in diverse talent in order to be able to compete successfully,” Lobo says.

Mindset makeover

The employer-employee relationship has changed. It is primarily driven by employees and many employers have acknowledged it. The necessities of employees aren’t linear any longer, and in order to attract, engage and retain talent, organisations must first understand the needs of their workforce, then develop a strategy and quickly execute a plan. Today’s employees expect much, much more from their employers— sense of purpose, caring and empathetic environment, total flexibility and a better employee value proposition.

“There are not many who understand how tech functions in aviation and one needs to bring in people from different spaces, have them exposed to the tech that we are utilising and facilitate their understanding of the process. It is definitely a long process”

Raj Raghavan, senior VP and head-HR, IndiGo

“The way people are looking at workplaces is very differently today. Their ambition quotient is rather high. Apart from that, there is a big change in the mindset. Ever since the pandemic struck, people want themselves to be heard and wish for their organisations to take action quickly on the challenges they may face,” says Nathan.

Flexibility, remote or hybrid working, transparency and empathy are now basic requirements, not ‘nice-to-haves’. Companies that want to remain competitive and retain and engage their top talent will need to get creative in order to differentiate themselves from the rest of the market.

“Today, people do not seek longevity in companies. They want to learn something new. They are averse to doing the same kind of work day in and day out. Hence, companies need to carve out strategies where employees can learn and grow. They need to prioritise career growth for their people in a bid to retain them for a longer time,” says Nathan.

Fast track digitisation

The pandemic forced companies to rush towards digitisation and that increased the demand for tech talent. People working in IT became the primary facilitators of this business transformation. With demand soaring, the supply hasn’t been as sharp for tech talent. “Currently, there is a huge demand for technology talent post the pandemic. Some of this is due to increased technology investments, supply shortage, and to some extent the lack of mobility that we see in some geographies,” says Lobo.

“Today, the pursuit for talent is as competitive as ever, led by a growing skills shortage, advancing technologies, generational shifts and evolving dynamics around nature of work. Organisations will therefore need to invest in diverse talent in order to be able to compete successfully”

Richard Lobo, EVP & head-HR, Infosys

Contrary to popular belief, digital transformation is less about technology and more about people. One can buy any technology, but the ability to adapt to an even more digital future depends on developing the next generation of skills, closing the gap between talent supply and demand, and future-proofing one’s own and others’ potential.

Raj Raghavan, senior VP and head-HR, IndiGo, details the criticality of tech talent and its crunch in the aviation industry, “Digitisation has been an absolute key to an airline’s performance, in supporting customers and improving internal efficiency as well. Unique talent in tech is recent in formation and is, therefore, in very high demand in the aviation industry as well. It’s not just about the technology behind the digitisation, but about how one incorporates it in one’s business to deliver the required results. Tech has a big impact —so big that billions of revenue can be lost if tech does not perform up to the mark.”

Raghavan admits it is indeed a challenge to find people who understand aviation technology. “There are not many who understand how tech functions in aviation and one needs to bring in people from different spaces, have them exposed to the tech that we are utilising and facilitate their understanding of the process. It is definitely a long process.”

Rush for automation

If the airline industry is looking for digitisation post pandemic, the manufacturing industry is grappling with automation. The deficit of business that the manufacturing industry had to incur due to the pandemic has led many factories to cut down significantly on manpower. This led to manufacturing companies exploring automation of processes for cost benefit.

“Talent building needs persistence and courage. Most of us are beneficiaries of bets taken by our leaders – we were provided opportunities to explore and venture into unexplored terrain. Identification of potential is most important because leaders can make an informed choice and ensure career success”

Raju Mistry, president & global CPO, Cipla

“Manufacturing companies will have to hire people who could juggle multiple roles. This will be a common factor across industries, as the concept of flexible working, the flexibility offered in terms of matrix structure, will become the centrepiece,” says Pankaj Lochan, CHRO, Jindal Steel and Power.

Further, Lochan says, “The whole concept of multi-skilling and automation of processes and systems will go beyond cost-benefit analysis now. The talent landscape will change. Only processes that will not add value when automated will remain, along with people possessing multiple skills. What will drive talent acquisition will be measured by how much impact one is making on the KPI”.

The same goes for the packaging industry. The sector has seen a massive shift in terms of automation and upgradation of machines, which has led to a shift in the skill requirement. “We need tech skills — which include mechanical, electronic and automation — capable of managing the demand. Talent with the aptitude and ability to learn, who can perform the day-to-day production tasks is sought after. Unfortunately, we are currently facing a gap in terms of mid-level skills,” says Chandan Chattaraj, president- HR, UFlex Group, a leading company in packaging.

Hunt for specialist 

It’s not that the industry is only looking for IT talent. Sector-specific talent is also much in demand, but somehow the demand for tech talent is also impacting the non-tech talent. The demand for tech talent is so huge that IT companies are forced to hire talent from parallel sectors as well.

“We operate in a polymer based industry where there is scarcity of ready talent. In fact it is rare to find people with experience and skills that match the demand of this industry. That is why we have been the talent generator in this segment”

Chandan Chattaraj, president- HR, UFlex Group

As Nathan explains, “IT giants today are hiring people irrespective of the degree or academic background. They want people to code for them, and in return they are willing to teach people those skills in three months, and put them onto live projects.”

In fact, IT companies are hiring mechanical engineers, mathematicians, and even arts graduates to fill vacancies. “This is impacting other adjoining sectors, such as manufacturing, where civil engineers, automobile engineers or electrical engineers are needed. Since these big IT companies can afford to offer better compensation packages, the adjoining sectors are getting impacted by a shortage of talent.”

“The kind of roles we see increasing will be concentrated in areas of managing new technologies. That is because, companies as well as governments have been and will continue to ramp up their technology spend to deal with the challenges that the pandemic has presented. These will include jobs related to AI, data analytics, product engineering, cloud computing and so on, as well as jobs that focus on the human – technology intersection, such as interface design and consumer behaviour analysis,” Lobo enunciates. One sector which has been majorly affected by the demand of talent in other sectors is hospitality.

With a majority of hotels and restaurants shut for the greater part of the past 18 months, the hospitality sector had to shed a significant chunk of its workforce. Sanjay Bose, executive VP and head-HR, ITC’s Hotel Group, believes that the hospitality industry, which includes businesses in travel, tourism and hotels, have a slow path to recovery ahead of it. “As this sector was so severely impacted, the pool of talent has taken a hit. People in the service sector will probably look at more stable industries, where employment may not be as subject to change as it has been in the hospitality sector recently. People who had chosen hotel management as their occupation may in all likelihood may opt for another industry which they deem to be more stable,” he said.

“The landscape will change. Only process that will not add value when automated will remain, along with people possessing multiple skills. What will drive talent acquisition will be how much impact one is making on the KPI”

Pankaj Lochan, CHRO, Jindal Steel & Power

This is already reflected in the sudden drop in the number of applicants for hotel-management courses. According to the Ministry of Tourism, on an average, about 32,000 applications are received for hotel management courses every year. In 2021, this number dipped to an alarming 12,000.

Out of the woods 

For Infosys, the hiring strategy is built on four key pillars — scaling digital capabilities, deepening automation and artificial intelligence (AI), reskilling employees, and increasing local hiring. “We will continue hiring based on this strategy, while making allowances for tailoring brought about by the pandemic. The talent market continues to be dynamic and evolving as several firms compete for the same set of people,” says Lobo.

Quality talent is always difficult to come by and onboard. This is the case for all organisations across sectors. For Lenovo, there is no imminent talent shortage at the moment for the core business. However, for its new initiative, where it is venturing into a new IT services and solutions business, talent does pose some challenges. “The name ‘Lenovo’ does not bring to mind ‘services and solutions’. Therefore, for the more seasoned and experienced talent, it may not appear to be the grandest of opportunities,” points out Bhavya Misra, director & head HR, Lenovo India. Further, finding talent for Lenovo’s tech sales vertical is also tough. “For tech sales, we are open to get talent from other industries but we do face challenges when it comes to finding experienced people in our line of business, that is, the tech consumer manufacturing line. There are not many large players in India operating in this space,” she states.

Gig works the problem

Jindal Steel and Power (JSPL) has taken a very different approach to cover this gap. “We can hire tech talent from outside but at the same time, we need our internal workforce to be able to handle the digitalisation process in a sustainable way,” Lochan says.

“Our own people need to acquire these cognitive skills. We have engaged consultants — senior level digital executives — to ascertain what tools are primarily needed for our business. For manufacturing, it is mainly artificial intelligence (AI) and machine learning (ML), which act as pillars for the digitisation process, while IoT skills serve as a canopy to these pillars,” he adds.

“The instability in the hospitality sector forced people to look at more stable sectors. People who had chosen hotel management as their occupation may in all likelihood opt for another industry which they deem to be more stable”

Sanjay Bose, EVP & head-HR, ITC Hotel Group

The major challenge at the moment is to identify the list of tools and skill sets that are essential to facilitate digitisation and impart them on the existing workforce in a coordinated manner.

That is why, JSPL hires tech professionals as facilitators, whose main job is to train and guide the existing workforce. “When we outsource tech talent for a project, we retain the knowledge that they have to a certain extent. On the basis of this, we create a framework upon which our existing workforce is upskilled. At the end of the day, it is a game of upskilling,” says Lochan.

Shortage of skilled and specialised workers has forced companies to share talent. The flexibility offered during the pandemic has led to skilled professionals juggling multiple projects on a freelance basis.

According to Lobo, the challenge for companies will be to re-engineer their workforce in order to integrate this freelance talent with the permanent workforce so that synchronicity between the two is maintained.

He further assesses that the gig-economy will only accelerate, as better talent platforms get enabled that will allow more on-demand models to function, giving people better opportunities to deploy their talent and get paid.

Polishing talent from inside 

Grooming talent and building an internal talent pipeline is not restricted to companies in the tech space alone. Raju Mistry, president and global chief people officer, Cipla, shares that since it is difficult to find good, relevant and employable talent, most companies have to build their talent pipeline, which she says is a daunting task given that people hop jobs every few years.

“Building talent takes time and persistence. Courage is required to bet on people. Most of us are beneficiaries of these bets – we were provided opportunities by our leaders to explore and venture into unexplored terrain. That is why, identification of potential is most important because leaders can make an informed choice and ensure career success,” she says.

Mistry believes that it is unfair to expect talent to be cent per cent ready for a job, as it’s not possible – each one gets there over a period of time. “The talent-management processes at Cipla enables us to address some of these issues effectively through our Talent Review Board, which are held periodically and systematically with the leadership teams,” she said. “We operate in a polymer-based industry where there is scarcity of ready talent. In fact, it’s rare to find people with experience and skills that match the demands of this industry. That is why, we have been a talent generator in this segment,” Chattaraj voices a similar concern.

Therefore, UFlex has a similar approach of training people in-house. It has been on a continuous expansion mode since the pandemic. Hence, there is a deficit in terms of talent. “We don’t get people who are pre-trained in dealing with the level at which we operate. Hence, we try to cope up with this deficit by providing extensive training to our new hires, as well as regularly upskilling our existing workforce,” shares Chattaraj.

The aviation sector also needs to train its workforce. In fact, Indigo has its own institute to do so. Raghavan explains that for the aviation industry, there are two broad types of talent required. Firstly, the industry-agnostic workforce — people who can work for any industry in similar roles such as marketing, sales, operations, for which hiring can be done externally. Then there is talent which is specific to the aviation industry. Raghavan deems them to be the nerve centres of the industry in terms of talent.

For the aviation industry, finding pilots was always a struggle, but with post-COVID restrictions, this challenge has been overcome to a certain extent. However, the big challenge is finding aircraft-maintenance technicians and ground engineers. “Freshly-trained academic talent is generally not ready to undertake these roles and needs further on-ground training. The Government has several initiatives to make this talent deployable, but I still think there is a lot to be done,” asserts Raghavan.

“We do face challenges when it comes to finding experienced people in our line of business, that is, the tech consumer manufacturing line. There are not many large players in India operating in this space”

director & head-HR, Lenovo India

Teaming up with the academia 

Academia certainly has a role to play in developing talent for the future. Chattaraj believes that the industry-academia partnership plays a very important part in creating a pool of freshers from the institutes which run very industry-specific courses.

“Hiring from such institutes provides us with ready-to-go-to talent and is very beneficial. However, they still require training intervention.” “Academia can only do as much. Beyond a point, where the talent needs to be made competent towards a very specific industry-related role, a company needs to address within. That sort of upskilling is a very continuous process, since tech is very dynamic,” he says.

Lobo opines that there is an urgent need for educational institutions and the industry to be proactive working together to train talent to become industry ready. “There is a need to look at re-skilling talent, introducing new courses and broadening existing academic disciplines to ensure that the talent we are grooming today in our universities can meet the needs of this dynamically changing industry,” he explains.

Infosys has maintained a sharp focus on reskilling employees in order to help bridge skill gaps. Lobo says, “While we work closely with educational institutions in curriculum design and courseware-delivery methodology; spend considerable amounts on fresher training; and attempt to address the skill gap at an entry level; the aspect of continuous education and learning has been at the forefront of our reskilling endeavours for employees.”

“This helps us accelerate project starts, aid rapid deployment of skilled resources, and create a strategic talent pool that can augment our delivery capabilities across diverse skills. Trainability has also become one of the dimensions in our selection process for experienced professionals, since there are skill linkages which can help reskill the employees through targeted training interventions,” he explains.

Misra feels that the onus of talent development lies with both industry and academia. “For the academic institutions, we, as industries, have a big role to play. If need to allocate enough time to guide the academic institutions to exactly figure out what the requirements are and how they can be bridged them. Only then can we really expect to find fresh talent ready to partake in the industry. We have to build curricula in collaboration with academia. Senior leaders need to devote their time and work hand-in-hand with the academia,” she advises. When it comes to ensuring that talent is industry ready, Bose of ITC hotels feels that academia is lagging. “We would like the education institutes to focus more on making talent industry ready. We have found alternate means of getting industry-ready people by running our own courses and joint programmes for those who have passed class 12,” he shares.

Are these institutes going wrong somewhere? Are they unable to meet the talent requirement? “That’s a problem with academia for many industries. Their conceptual knowledge is either not current or is outdated. Secondly, there are skills required by a person to be industry ready, which are beyond the scope of the classroom. That’s an area I believe most hospitality institutes need to focus on,” Bose concludes

(This article was first published in HRKatha Print Magazine)

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