30 Dec
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of his organization.
Mr. P. Ratan Swami studied at IIT, Bombay, and then at IIM Bangalore where he majored in finance and strategy. After his graduation, he worked as an investment banker for 5 years.
Then he joined Ernst & Young Consulting, on a few projects out of the Middle East and Europe. Moved to Canada in 1997 to work with Canada Bread/Maple Leaf Foods, a conglomerate in the food sector, and has worked on strategy, turnarounds, and mergers and acquisitions. The company offers a great work culture and is recognized for being one of the best employers in Canada.
Q- Thank you, Ratan, for joining us today and agreeing to share your views on people/talent management.
When you asked me to join this informal chat, I readily agreed because I personally believe that success in any organization has a lot to do with people. Though I am not an HR person, I am truly passionate about this topic. If people are central only to HR and are not discussed or thought of by any other function in an organization, that organization is not going prosper. People have to be front and center to every function.
Q- Completely agree with you. You have led some of the transformations within your organizations in your 28-year long career. You must have seen many changes in the methodologies and approaches to measuring performance and managing it. Can you share some light on – What kind of management practices have you led in these areas? Over the last, maybe 10 or 15 years, how has technology affected the way people work and how are these two correlated with each other? Please share your thoughts and observations.
I’ve had the good fortune of working in every continent except South America. I have done work in almost all the major economies in these continents.
What I found to be a constant during all this global exposure, with all the obvious but superficial cultural differences, is that talent remains the core of a business. Without being an HR person, I strongly believe that the core of a business is talent. It is all about talented people.
There are four things we need to do with talented people. While it is important to hire, motivate, develop, and nurture all employees it is critical for talented employees.
- Hire them: When a position opens, we receive about 3 to 4 hundred resumes. In India, it could be even more. In Canada, when hiring for a position in Strategy, selecting the right talent from out of 400 resumes is a huge challenge especially when you don’t have a framework for it.
- Motivate them: We need to develop them, nurture them, and keep them motivated. We don’t want talent to stagnate and stay without development. When they aren’t offered a growth path, people get bored and staid. This is like handling a double-edged sword. The same people who can do your organization a lot of good when motivated can do a lot of harm when demotivated. The smarter ones can do more harm. They can ruin the team environment or figure out innovative ways to sabotage an important project. These are no buzzwords, one can observe this in reality.
- Develop them: Development is not to be confused with training. Training happens when you impart new skills to a person. When you develop, you develop them as a leader.
- Evaluate and Incentivise them: You also need to evaluate and incentivize people. To do all these things, you need a framework that incorporates the core values of the organization.
A caveat here. Measuring results is important but measuring only results can be extremely dangerous. Short term results can sometimes hide the long-term harm. When you think of only measuring results, one organization that comes to mind is Enron. Many investment banks still measure results and pay bonuses to employees based on the results achieved. People can focus only on the short term to earn a big bonus. Many of them walk away to continue such practices somewhere else, while the organization itself suffers the negative outcomes of their actions. Organizations may end up being shortchanged or completely ruined by such actions focusing only on short term results.
Every such action needs to follow a framework and have a structure. When organizations try to prioritize certain things, they may find one manager rooting for customer service while another feels innovation is paramount. A third may prioritize response time. Someone else may have another choice. While it is important for an organization to follow one framework, it may have different interpretations. You need to have a proper system that ensures that the framework is very well thought out and applied uniformly. Getting everyone in an organization to follow a framework is akin to getting a bunch of cats and herding them all to go in one direction. Not easy at all because cats are not like horses, cows, or sheep!
So, everyone needs to measure the same thing, despite their biases and subjective opinions. There’s no way we can achieve 100% objectivity (I don’t think it even exists). But, you can try to make things as objective and as meritocratic as you can. I’ll share with you what I usually do when I hire. I never hire alone. I prepare a set of criteria for hiring. Then, bring in two or three of my colleagues, teammates, and one or two of my peers.
The criteria for hiring could be related to the role itself, like communication skills, confidence, ability to synthesize/present information or conduct quantitative and qualitative analyses. Additionally, we have a set of six values in our company, to measure which we ask a set of questions. As a team of 5 or 6 people, including an HR person, we shortlist about 5 candidates out of a pool of 300 and interview them, within a short period of time, without stretching it over a long period, so that the recency of our evaluation is not lost.
Then everyone gets debriefed and every candidate gets scored. I never overrepresent myself and always listen to the opinions of the other people on the team about the candidate’s weaknesses or negative points, even when they do not reflect my own.
Q – So, you basically ensure that you get objective feedback from people who have talked to the candidate.
Yes. That is how I expect 360 degree hiring to work. You cannot hire a person because you liked them or because they said a few things that clicked with you. Basically, the hiring process is quite onerous. When you bring someone on board, to spend six to seven hours in that company and interact with everyone, you have to reduce subjectivity in hiring and in evaluation.
Q – How do you take this process forward when evaluating the performance of an employee? Do you think a 360-degree evaluation of performance is a must?
The process mustn’t become political. Every organization has some politics. Some people politically align with some people, while others don’t. Merit must thrive, not people who are politically aligned. Allowing people who schmooze, to get ahead of others is to the detriment of any organization.
It’s great to adopt a system that helps people maintain that objectivity, whether for hiring or for evaluation. Even when the skillsets needed change by function and cannot be standardized, establishing a framework by which people get hired and evaluated objectively is what makes organizations successful.
You could be operating in a monopolistic environment and still fail if you don’t have the right talent. You could be working in a very tough environment and have great people and you could still thrive. Look at the social side of it. A big organization that thrives, makes so many people happy and prosperous. Most of the big organizations have tens of thousands of people working in them. It means tens of thousands of families depend on the earnings of these people. So, a successful organization is doing a really big social service. They’re actually helping tens of thousands of people and their families to survive and thrive and vice versa. If the organization fails, all these people and their families are in the doldrums. In India, we will say this is Dharma.
Q – Moving from recruitment, it is also important to make the whole process objective once they’re onboarded. How do you do that? For example – How do you translate, or devise a system to make people understand what they have to do and what competencies are needed to do a job? How do you enable them, give them the tools and the competencies they need, show them what needs to be delivered, and monitor them regularly? Then, how do you evaluate them?
There are three dimensions to performance in any role. These are results, core values & tenets, and skillsets.
As we already said, results are extremely important. They need to be set in advance. If I have seven direct reports, each one gets a set of objectives. There are basically the results that they have to deliver. They’re set in advance before the beginning of a year. The results also have to be objective and measurable. You may set building relationships as an objective, but it is not like asking about the number of meetings or the number of favorably disposed people, whom we met. Setting more than six objectives would prove too much and setting less than two would be too little, unless they are massive goals. If you have a system that sets these goals and measures them, whether they cater to external clients or internal, it needs to also take their inputs.
I think customers need to weigh in on a performance evaluation. Let’s say, I am heading the supply chain function and I feel I did a fantastic job because my fill rates are 110%. My internal customer is the sales team. They may come in and say “No. You have short shipped 90% of the orders and you have overfilled others and dumped the product, to get a fill rate of 110%. 90% of our customers are extremely angry and upset, because of your bad performance overall”. Obviously, the feedback from the salespeople is the most objective and important one, not the fill rate. That needs to account for.
Some things are fundamental to a business, an organization:‘The value principles & core tenets of an organization’ and they should not change for any employee in the organization. They are something very dear and very important to the organization as a whole. For example – What do you stand for as an organization? What is the purpose of your organization? Take Citibank. In many different parts of the world, I have dealt with them and I found them and their service just awesome. You’d be surprised how uniform and exact their service standard is. Call them, and they answer exactly the same way. “Citibank. May I help you please?” Whether you call them in Riyadh or you call them in Singapore (or in any other part of the world), the phone is answered exactly the same way. The phone never rings more than twice. Their service to a customer is the same. When you go into the bank, you get the same expeditious service. It has only improved with digitization. That high standard of customer service is defined by their core values as n organization.
Take Patagonia as another example. It is a clothing company that swears by environmental sustainability. They once ran a campaign saying, ‘Don’t buy this jacket’, with a tagline – if you don’t need it. This makes perfect sense when we remember that sustainability is their core tenet!
Another tricky measure of an employee is about skills. For every function and every role, there are skill sets that are needed. As a supply chain guy, I need certain skill sets but as a purchasing guy, I need some other skillset. I have to be a good haggler to be a good purchasing person. I have to bring my suppliers’ prices down without compromising on the quality. As a production guy, it’s very important that I run lean operations and produce on time. So different functions have different skillsets. Certain skill sets are specific but some others, like the ability to communicate, are common to every function. The ability to see the big picture and understand the implications of what you do on other functions is considered a strategic skill. Not everyone is able to see it, and there are some who see it but still deliberately ignore it and do whatever they want to do.
Q – In a majority of the organizations, we very rarely see that their values have been imbibed by a large part of all the employees. How can one ensure that all employees understand what the values mean and demonstrate them in the workplace? How do you measure that?
Values are very ethereal and intangible, so it’s a long journey. There’s this 25-year old book named ‘Straight from the Gut’ by Jack Welch. He was one of the leading guys in creating a value system for GE. He says it takes a long time to create values and to embed them in the organization. You need to talk about them in every meeting at work. You need to constantly keep reminding people of opportunity, whenever there is an opportunity. You may put a plaque of your values in every meeting room. Gift a mousepad that displays all the values to all employees. Create a computer screensaver with them. Encourage discussions with employee participation, to decide which values are consistent and which ones are not.
Employers must be open to feedback and willing to participate in overt discussions to check the consistency of their value system. It’s a long journey because it’ll take years and even decades to get really deeply entrenched into the system. But, companies that do it well will reap good benefits.
Q – Given that values are ethereal, do you see a role for technology in helping to establish values in a company or track the three dimensions of performance you mentioned?
I’ve seen and dealt with a number of companies in my career, during my investment banking days and consulting days as well as in managing M&A activities. Some of them do it really well. Most pay only lip service and do very little. Only a handful really get it right consistently.
The difference shows in the results. I mean, that’s why only those who do that are at the top.
Yes. It clearly proves the adage, ‘As you sow, so shall you reap’.
I don’t think it’s possible without a system or a business process that makes sure that people cannot interpret values & tenets in any other way. Every word needs to be thought through and made a part of the system. It should be made a part of the business systems and imparted to new employees in their orientation sessions. You have to make it a part of your core IT system and incorporate it in all the aspects of how you hire people, evaluate people, and incentivize people. People who meet the criteria on the three dimensions of results, core values & tenets, and skillsets need to get rated high and get priority in development ahead of other people.That’s how you can propagate it.
Ultimately this process has to benefit people, not just the organization. It should act as a symbiotic process, with people doing a great job because they have the core tenets needed by the organization along with the skills, and they’re delivering the right results. I believe that these people also should get the first chance to opt for any training and development being offered, especially for career progression.
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