What is a bigger challenge for an enterprise-- is it organising funds for growth or acquiring talented hands for the business? Ask any entrepreneur and he would put his fingers on the latter. More so because an SME does not enjoy the brand equity to create a bench and the tight liquidity position would never allow the luxury of extra hands. It is imperative for an enterprise to hold on to the talented pool as long as possbile. How does one achieve it?
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| Srikala Bhashyam |
I came across an interesting story from an entrepreneur a few months ago. He is an auto component dealer who has been in the business for nearly a decade now. The business, as has been the case for many in this sector, has acquired size and at present, the turnover is in excess of Rs 10 crore. But what is more interesting is the employee story. The entrepreneur has managed to retain his first batch of recruits over the last decade. When I probed a little further, it was not surprising.
His mantra for people management has been simple. Share and grow. In the initial years, he rewarded his employees on an annual basis through small increments and bonuses. Over the years, as the size of transactions got bigger, he decided to reward his staff in line with the growth. In fact, seven employees who have served the company for a decade were given keys to their brand new Maruti Alto cars!
As recession is turning to be a thing of the past, it would be imperative for all enterprises to get back to the days of rewards to spruce up productivity. In the case of small companies, arriving at the reward is a challenging task. For instance, how should a company reward an employee who is a trusted hand over a well-qualified young employee who may not be a long term bet? More importantly, how does a company move from the days of adhoc incentive programme to a structured incentive model. Here are some tips for the transition:
Prepare employees for the transition: While the turnover and profits can make a company big, it is the attitude which brings about the change. An organisation which believes in itself as a large organisation will find it easier to transform at a later date. So, irrespective of the size, put in practices which are akin to large companies. For instance, pay-hike on demand should be a strict no and fix a time frame for the same. It could be according to the financial year or calendar
year or as per the career commencement period for employees.
Put in place structured reward programmes: Every employee finds it easier to perform when he is told his reward in advance. A kid will behave himself when he is tempted with a chocolate and a student will be willing to put in extra hours if he is promised a two-wheeler for a good academic performance! You can’t expect the trend to change when these boys turn men. Of course, an employer should make sure to keep the reward exciting in line with the changing periods. A little bit of innovation can do some good. Take the case of the earlier example. A Maruti car is surely a big carrot for an employee for his performance.
Communicate the rewards and give time for the employees: One of the key factors for target achievement in large companies is the continuous monitoring of sales targets. Since employees are communicated well in advance, the goal
is set. Smaller companies, on the other hand, end up doing more of post-mortem than
forward looking.
As the companies get bigger, there is a need for induction of competition and the best way to go about the same is to fix targets both at individual and organisational level. While employees have little to do with the organisation’s targets, the individual targets and their subsequent achievement can go a long way in recognition of performance.
While the above points are well known and easily sustainable, the challenge for many companies relate to the starting point. It is not a bad idea to get a professional consultant to develop the entire process but the same needs to be customised keeping in mind the work ethos of
a company.
An entrepreneur friend recently narrated an interesting story. The company, based in the industrial suburbs of Bangalore, hired a consultant to devise a fresh compensation package. After the package was announced, 20% of employees quit job since they were not happy. Another 20% demanded further hike as the new policy failed to reward loyalty. But many of them put in papers as the economy revived. My friend felt that the company could have done away with half attrition without actually hiring a consultant!
Many consultants come with ready-made solutions which may not work for SMEs. It’s for the Management to sit with consultants and customise the HR policies. May be the entire process of transformation has to be done in phases, she points out. She has a point because transition is never a one-off affair.
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Srikala Bhashyam is an investment consultant and runs her own consulting firm in Bangalore. She has been a regular columnist for the print and internet media on personal finance.
To write to the author, please send an email to dare@cybermedia.co.in with the subject line 'Srikala Bhashyam'.
Disclaimer: The views expressed here are that of the author and do not represent the magazine's.
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