Manual HR to Digital HR: What Would Drive The Change?


Transcript:

I think we now need to understand what trends would drive change. If the world is changing, if the world within companies is changing, if the world with our own lives is changing, what actually is happening? One is the world is getting mobile. Everything is going to be the part of your smartphone, and I think this is a big change. I hardly use the laptop anymore maybe I don’t even use my i-pad as frequently, but I do use my i-phone for almost everything that I need to do.

The second big change which is happening is the cloud. We don’t need to invest huge amounts of money for an on-site establishment of our own complex set of servers and databases. At a fraction of a cost, we have everything available on the cloud.

The third big thing that is driving change is analytics. It is the power to analyse and analyse quickly, work through tons of data to get the key insights, to see the key trends, positive or otherwise. And I think this is going to be a huge shift that is going to drive a lot of change in management thinking and therefore response time.

Fourth is about automation. A lot in the world of our employees is going to get automated. Jobs are going to get automated, jobs, therefore, might be getting redundant. It is also possible that a lot of transactions today which are done in many other ways would not need to exist because many things will actually get automated. I think this is a trend whose time has come.

And finally, whether it is AI induced, but this entire concept of internet of things, different things talking to each other, I think this is really the web that we are going to be living in. If you look at this reality the experience of an employee, the work of an employee, the job description of an employee, the expectation of an employee, the expectation of a manager everything is going to change. It is not about whether this will happen, it is about how fast it will consume all of us. I think this is a very important dimension that we must be very cognizant of.

As I tweeted sometime back, ‘AI is set to disrupt companies, its people and its culture. Will we be losers or winner through this shift?’ To me, the answer is very it depends on how we want to play this game. And I think the winners are the ones who will adapt and change a lot of their environment to make sure that they don’t resist a reality whose time has come. The losers are those who are going to be challenging and trying to prevent the tsunami which is all set to hit us.

 

And therefore if all of this is happening what would change? Decision making will change, the speed of decision making will change, and people who can make decisions will change. I think this is a huge move towards democratising organisations. It’s a huge move towards building greater accountability and transparency in systems.

The other thing is everything is going to get more social, more networked, more matrixed, more people communicating with each other, more people eliciting information from each other and inviting ideas. I think this is a big change where we will go beyond individual personalities. So the old landlordism mentality is going to change to a world which will be networked.

Which also, therefore, means that the world will have to depend more on collaboration. Because there will different expert groups which will come together, but not everyone is going to be an expert at everything, and you will need to leverage the power of the other. And I think this entire phenomenon is going to be a big cultural transition for organisations, for leaders and for hr functions to handhold.

And finally the employee experience will change. Because the nature of your employees will change, the demographics of your employees will change and therefore the way people will expect the organisation and the experiences at work will be very close now to the experience they already have in their own social and digital reality. I don’t think this divide between the private and workspace will sustain itself. And therefore to what extent would organisations, their systems process and culture need to change? But I think these are big dimensions of what would need to change.

And therefore if you were to look at an HR lifecycle everything from recruitment, the way we recruit the catchments we look at, the way we induct talent into organisations that are going to change.

The role of the entire employer branding, the role of individual branding, personal brands will become very very important. Because at the end of the day recruiters are going to be looking for people with strong personal brands.

And how many of us actually are aware of our personal brands, do we have one? How do we create our brand pull, both organisations and individuals? How do invest in it? That becomes very important.

Talent is going to be more expressive, they are going to be writing their comments on social media. There are going to be many more glass door clones that will happen, and how do you, therefore, look at managing the appointments and disappointments of vocal talent?

Therefore the role of leadership is going to change. There will be a disruption. Leadership for 30 years is no longer going to be the reality, it will be leadership of the moment and by the moment. Decision making by leaders or by people at large will get to be more data aided. It will be more transparent.

It will be very important to start looking at dashboards, real-time. I think a lot of results are going to be cut real time, quarterly results itself might be dated. You will measure things by day, by the hour, by the minute.

Leadership definitely will get lot more doors of objective inputs. It will never be completely objective because at the end of the day there will be calls to be made. But there will be a lot more of objectives measures.

And of course at the end of the day deployment of capital including human capital will become very central and therefore deployment of skills will be calls that will be made very carefully and closely.

And therefore the entire concept of talent management will be change, hiring right, placing right, valuing right, a combination of whether you need full-time employees regular employees vis-a-vis moving to a more team-based project-based set of external experts getting together. All of this will become a part of talent management.

So I think talent management will no longer be an internal exercise it will be interwoven with talent acquisition or talent supply. And talent supply may not be an employee acquisition or an employee supply.  Issues around work content will become very important. People are going to be looking at the content of their jobs, not necessary at the title of their jobs.

In a world of individual of free agents and high expertise, employee mobility will become very high and therefore lifelong employment as a talent philosophy might be in question. And thus how do you deliver long-term results working with individual free agents is going to be a reality of talent management. And all of this will need a huge amount of data to make sure we make decisions which are sharp precise and effective.

And finally, the entire concept of business partnering is going to change. For HR it is no longer going to be about doing transactions or making query resolutions, it is going to be about helping solve real business problems.

So what is the problem? I think HR is going to ask that question. What is the business problem? And therefore take the larger HR route, organisation design route, talent route, culture route, engagement route. Whatever route you take, it will be about solving the business problem. It will also be about enterprise risk mitigation, so I think HR will get to be central to being the business.

And all of this in the context of living tech-savvy and socially aware employees who will expect nothing less and whose demands will continue to be high. And in an era where there will be what I call information democracy this entire nuance of business partnering becomes very different than what we have classically seen for many many years.

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Books – A Cerebral Affair

“A Reader lives a thousand lives before dying. Those who never read live only once!”

We enter the corporate world with the confidence that we can change the world. But this lasts only “until the coarse necessities of physical existence drag us from the height of thought into the mart of economic strife and gain”. Our everyday challenges – finding and then doing well in a good job, keeping up with an often fragile relationship, the heavy load of expectations from our parents and ourselves, lack of clarity on what we really want to do in life, the rat race and constant comparison with our peers –pull us down into mediocrity. And the grand idea of being the very best we can be gets quietly put aside.

So Why Books?

If we agree that good counsel can help improve life, what better guide than books? Mentors and teachers can come and go, and may turn out to be false Gods. Why not drink from the ageless wisdom of good books, learning from the myriad experiences of some of the best of our species?

As Durant said, “When life is bitter, or friendship slips away, or perhaps our children leave us for their own haunts and home, let us come and sit at the table with Shakespeare and Goethe…”

What To Read?

There is a book for every mood and occasion. I can start with a few from my side (click the link for more recommendations and a short summary)…

Are you feeling dejected and lost? Read Philosophy and delve on the deeper meaning of life. Start your journey of self-discovery through Siddhartha or the big question on God through The Case For God.

Are you feeling low after your annual review? Lookup something in the Self-Help genre to improve yourself. Perhaps read  The Seven Habits of Highly Effective People to understand what makes people successful or read The Happiness Project to understand what gives us happiness. Or even Tuesdays With Morrie to learn life’s greatest lessons from a dying man.

Are you plain bored? Read good Literature, the narrative of our lives, and get entertained and glued. The Kite Runner will make you cry and cringe, and The Animal Farm will bring alive how power corrupts.

Do you need more tips in managing people and work? Tons of Management books to choose from. The One Minute Manager to manage people and work better or Don’t Sweat The Small Stuff to get a new perspective on all the daily stress in our lives.

The list wouldn’t stop.

Popular Science like Physics Of The Impossible to wonder if science fiction can ever become reality under existing laws of science.

Or History like Sapiens to read the beautiful and gripping story of our entire species.

Or a great Autobiography like Screw It, Let’s Do It to learn lessons in life and business from Richard Branson.

(If you want more, see my blog on 100 Books To Make Us Wise).

Part of what makes a book memorable is our own life experiences that can relate to it. So look out for what appeals to you. Obviously, choose the books very carefully. Good books can be an everlasting love affair, just as bad books can be more enervating than a date gone horribly wrong.

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Union Budget 2018 – A Budget That Improves The ‘Health of the Nation’

Union Budget 2018 did a commendable job in addressing critical social sector priorities such as healthcare, education and agriculture – a progressive move that will help improve rural economy, encourage entrepreneurship and trigger future growth.

We welcome the world’s largest government-sponsored healthcare scheme – Ayushman Bharat Programme which will extend the benefits of health insurance to 100 million families, ensuring access & affordability of healthcare products and services to a larger section of the society. While there is no immediate impact on the industry, the move could trigger a rise in demand for medicines.

The investment in Government health and education programs is indeed, an extremely progressive step that will usher in healthcare reforms in the country. The industry continues to remain hopeful of the Government to take steps to promote pharma R&D in the country through the rollback of phasing out of weighted deduction on R&D.

The extension of the lower corporate tax rate to MSMEs will support expansion and growth. It could have been extended to larger corporations as India’s corporate tax rate is towards a higher range when compared globally.

On the larger macro-economy, the focus on financial prudence and keeping the fiscal deficit under check is appreciated. The reintroduction of LTCG tax might be perceived as detrimental by market participants. The recommendations and policy changes in the budget have the promise to take India forward on a trajectory of economic growth. However, the implementation of the same on the ground level will prove to be the litmus test for the government.

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People And Process: The Backbone Of Quality

Quality and consistency are important to every industry, more so the pharma sector. Every industrial sector has its own rules and regulations that govern it, and the pharma industry is no different. It is important to follow certain processes to ensure quality of the end product. We all know and realise the importance of these processes, but as an industry, we still face several problems of quality.

The four Ps

In my opinion, there are several factors that contribute to the success of an organisation, the most important, in our context, being the 4Ps: Patient, Physician, People and Process. The initial two – Patient and Physician – are vital to us. Though they are the reason for our existence; they are external factors. The last two – People and Process – are internal factors that contribute to quality, and eventually to our success. These two factors are central in the larger scheme of things.

The right processes

Quality is the by-product of excellence and consistency. It’s not just enough to achieve high standards of quality; an organisation must be able to replicate it consistently to achieve success. When we create a process that is simple and fail-proof, it is that much easier for employees to follow it without making errors. It is important for an organisation to continuously work towards simplifying the process, so people can carry it out consistently, day on and day out.

Sometimes, we have procedure documents that run on for more than 100 pages; it is not easy to follow such processes every single day flawlessly. People are prone to error; sometimes employees are not in the best of health, or they might be distracted by other things. Everybody has good days and bad days; people are not robots, they have emotions. What they do at work has a great impact on the organisation’s success. We need to create procedures that are fail-proof, and simplify the lives of the people who work on the product, thus ensuring that the end product is always safe and effective.

People power

People drive the organisation and it is important for every company to invest in the right people. Twenty years ago, I thought that it was the process, the SOPs, and the systems that was important for consistent quality. With experience, and as I reflect more, I realise that it’s the people who define the success of a process.

Harnessing the power of people is the one of the biggest challenges faced around the world. People are governed by their emotions, and different people have different levels of understanding. To create a workforce where everyone follows the rigours of the process consistently, and where they understand the impact of errors, is a daunting task.

In any industry, the more the organisation relies on manual power, the tougher it is to be consistent. It is a challenge all around the world, and more so in India because people face more hardships here. Just getting to work is exhausting because of the traffic and the lack of discipline on the streets. It seems unrealistic to expect people to perform their very best at all times at work when people have to struggle just to get to work. I have seen people cutting corners and breaking traffic rules to save a precious few minutes on the road. If people are cutting corners outside office, it is highly likely they would do the same at work too. And that is why it is important to hire the right people; the company that gets their people right is going to be the winner in the long run.

A possible solution to this conundrum is to automate as much as possible. For instance, the automotive industry has automated a lot of their processes unlike the healthcare industry which still relies on people. The highest peaks of success and consistent quality can be achieved by automating as many processes as possible, simplifying processes that can’t be automated and hiring the right people.

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M&A Strategy: Things To Keep In Mind

A second panel saw panellists throw light on how they are developing a rigorous M&A (mergers and acquisitions) strategy while also touching upon finer details like how different a beast digital M&A is compared with traditional M&A and what are the considerations associated with buying innovation.

The panellists included Nishant Verman, vice-president and head (corporate development and strategic partnerships), Flipkart; Chandru Chawla, head (corporate strategy, M&A and new ventures), Cipla; Sundareswaran S., executive director, Morgan Stanley; Saugata Bhattacharya, senior vice-president and chief economist, Axis Bank Ltd; Makarand Padalkar, chief financial officer, Oracle Financial Services Software Ltd; Vivek Gupta, partner and head (tax M&A team), KPMG; and Sridhar Gorthi, partner, Trilegal. The discussion was moderated by Shrija Agrawal, national deals editor at Mint. Edited excerpts:

How does India’s top consumer internet firm think about M&A? You just raised a huge round of funding from SoftBank, are you preparing a war chest for acquisitions?

Verman: We are in an industry which is arguably 10 years old. E-commerce interest is just 2% right now but we believe that at some point this 2% will become 20. We have to think as to how should we accelerate innovation and this innovation can take the shape of some core capabilities or consumers. We work backwards from saying what a customer needs, what innovation will be required. Today when I look back, between the three group companies, we have about 65-70% market share. If you see how many consumers are buying online today and if I were to increase the number of customers that are buying online then I have to work in a way to make them buy more things online. There is an infrastructure layer, which makes the buying behaviour of a customer smoother and faster or quicker whether it is category expansion like grocery.

I need to think how we work in these areas (category expansion), and what are the capabilities that I might need. As to new customers, we are looking at both urban and semi-urban market. Eventually, all of India should buy from us. There are people who have access to customers and have a relationship with customers that we don’t have and we need to be faster to do something about that. When it comes to infrastructure and logistics, we continue to look at what others are doing and maybe partner with them. Wherever we see innovation in infrastructure and core capabilities, we will continue to buy.

What about Cipla’s M&A strategy? You recently stepped up your game with acquisitions in the US?

Chawla: Cipla has been transforming itself to become more innovation-oriented, more geographically diversified and also to take a jump in the US market where unlike our peers we were a bit late to enter. So it called for a bold and large inorganic move which we have completed. The external world seems to be positive as we took the right move. We are not in the fashion industry where we should be looking at what we do every other day. Firms like us, based on the old world of brick-and-mortar model, we have to think long-term and stay focused. The focus has to be our key mantra for the coming five-seven years.

For us, the US will still remain a big growth driver. There are tidal waves in the US at the moment. The timing was a little bit surprising. There is a lot more consolidation to happen. Health budgets are under serious pressure. The kind of mercenary and credit pricing that was quite phenomenal in the US won’t be possible in the future. But for companies like us, there are ample opportunities to climb up the value curve in a more innovation-oriented model without relying on the business models of the past. For companies like us, the basic model was copying the generic medicines. It had a copy-cat mindset which is different from an innovator’s mindset. You cannot incubate a company like Google or Facebook in a company like Infosys. Five years ago we created New Ventures which was like an internal incubator. The new things that we want to do require a completely new ecosystem. We started doing that in a unique way by sequestering it from the mainstream. Consumer health is a great example and we realised that it is not a pharmaceutical game, but rather a fast moving consumer goods (FMCG) game. Pharma company is more front-ended in a way that it gives returns on investment. An FMCG company, on the other hand, is more back-ended. We invited private equity to invest; that went well. Consumer health, creating an innovation-oriented business in the US and consolidation in India in a big-bang emerging markets are our key growth driving factors.

Consumer health, creating innovation oriented business in the US and consolidation in India in a big-bang emerging markets are our key growth driving factors.– Chandru Chawla, head (corporate strategy, M&A and new ventures), Cipla.

Could you break down the good, the bad and the ugly for us and what corporates should factor in when making investment decisions?

Bhattacharya: We are going through a mess due to the goods and services tax (GST) system. That’s a short-term pain which is the ugly pain. But there are lots of goods. As for macros, we are the darling of foreign investors. Global investors are all very bullish on India. The infrastructure is getting better, the government has a vision and they are willing to execute it. The legislative system is improving with the infrastructure, insolvency and bankruptcy laws, GST in particular and Real Estate Regulatory Authority (RERA).

The best parts are some structural shifts that are happening in the system like homogenization and financialization of the system. This includes people moving from cash to digital platforms. The tax revenues of the government have increased as a lot of people are complying with the tax regime and the government has become efficient in spending this money. Our payment systems are the best in the world. There is nothing better in the world than the unified payments interface (UPI)s. However, sooner or later one downside of this digitization is that you will lose on the regular salaried job market. It will be more of a sharing economy but with this comes the marketplace. There are three characteristics of this market-driven economy. One, this is very information-centric, particularly information with a lot of asymmetries. Secondly, more the number of customers you acquire, the more valuable the company is which is the key to the economy. What comes from combining these two is the stickiness that you can induce in your customer base. This can bring changes in the business model that the companies can begin to use to acquire scale. The key focus on short-term profits will slowly begin to dissolve and move further. The focus will now be a long-term capital strategy. That are the key changes you are likely to see in the next 10 years.

There is so much capital available out there. We have SoftBank Vision Fund, Canada’s CDPQ, CPPIB and other private equity players investing too much capital in too few assets. Is Canada the new Japan? What is your take on this?

Sundareswaran: There are new pools of assets. There is a diversification of assets. Sovereigns funds come from all parts of the world. The pools of capital have become large from what it was. People are no longer really dependent on asset managers. People are willing to take direct investments. In terms of chasing the sectors, there will be a moment at times where one set of sectors will be more attractive than the others. In general, we feel that we are in a zone where growth is going to be strong.

Give us a sense of what you are seeing in the information technology (IT) sector right now? Oracle has been a very prolific acquirer globally but not in India?

Padalkar: IT sector as of now is full of M&As both of shape and size. In this particular sector, a lot of intangibles are needed and this is one of the challenges in this sector. There are expectations of growth as we move forward. The second problem in IT is to determine a good valuation model for innovation. The third problem in IT is with people because while we all say that we make IT independent of people but in practice, it is not true. People suffer structural change when an asset is acquired. Ability to assimilate new talent and not let them go is another key factor which is taken into consideration. Fourth thing which happens in IT is that most of the acquisitions are done at a slightly green field or an advanced stage and therefore the capital required to make it successful is a difficult game. The challenge comes when there is not so much appetite for capital funding in an organization for an M&A. At a firm level, the decision of M&A, we take at a global level. We look for global footprint and not region specific. In India, there are no core IT assets available.

IT sector as of now is full of M&As both of shape and size. In this particular sector, a lot of intangibles are needed and this is one of the challenges in this sector.– Makarand Padalkar, CFO, Oracle Financial Services Software Ltd.

As a tax expert, if you could give us a sense of evolving tax laws in M&As which corporates should be cognizant of in the near future?

Gupta: Historically, we have been in a tax environment where largely we have followed a rule-based approach as to how we structure our taxes. Fundamentally, over the last three or four years, an overlay of substance norm is coming in. Ten years ago, lots of firms migrated ownership from India to overseas and to do that now under the current tax regime is far more challenging. Externalization was very simple 10 years ago but now the rules have been changed. We are now in a regime, where we are transitioning perhaps from a rule-based law to a substance-based law.

Give us a sense of how deal-making has evolved in the country. There is so much of talk around consolidation, tomorrow if Uber were to acquire or merge with Ola, which is not far or a distant possibility, will that be considered monopolistic by Competition Commission of India (CCI)? How are they looking at these transactions? We saw CCI setting the stage for Lafarge to sell some of its India assets to consummate its merger with Holcim?

Gorthi: From a legal adviser’s perspective, deal-making has evolved structurally almost unrecognisable from a decade ago. The environment is in a stage of transition. Structural changes like bankruptcy code, RERA, all these changes how they will play out is yet to be seen. The answer to your question of Uber acquiring Ola is little surprising. If this thing happens it will have a monopoly in the market and will have a massive market share but some of the mega-mergers, the experience has shown that the CCI is the most pro-active and facilitative regulator. The competition regime when first came in through and CCI was put into play, merger control became a thing. The first concern for many of us had that it is going to be a bottleneck and will slow down the pace of M&A. The actual experience, however, is different. So often if you see large transactions which require approvals from a number of different regulators, CCI has become an interactive facilitator in giving guidance. They have the power to disallow the transactions and internationally this happens very often. They have been facilitative in a few transactions. So Ola-Uber merger or an acquisition is likely to run more into difficulties on government policies for aggregators rather than monopolistic.

Vivek, if you can throw some light on how the present dispensation is trying to create a positive environment for investors? Has abolition of foreign investment promotion board (FIPB) proven to be a good move or a bad move?

Gupta: The intention is all correct and in the right direction. The government has come out with the guidelines for e-commerce and foreign direct investments (FDI). A lot of sectors have been opened up for investment. It is too soon to say whether clearances will become easier or not. Many applauded the abolition of FIPB. As per our interaction with FIPB for the past five to seven years, it was actually a body that got together with various parts of government. FIPB provided a forum where the government could take a decision together. They acted as a mechanism whereby the government was forced to respond to the meeting which was held every alternate week and there was a committee which would then take a joint call. I don’t quite know whether putting this power back in the hands of the administrative ministry will hasten approvals or it wouldn’t. I am holding my judgement on whether abolition of FIPB is a good or bad move, although from an intention standpoint, it was a good intent and we should remove bureaucracy wherever we can.

What we are seeing now is domestic consolidation, industry leaders coming together; it is no longer about who is controlling the business.– Sundareswaran S., executive director, Morgan Stanley.

Sundareswaran, as an investment bank, how are the deals in your pipeline looking like; where do you see most of the deals coming from?

Sundareswaran: Historically, we have always done inbound transactions which used to constitute 50% of the overall deal value, but that is changing a bit. What we are seeing now is domestic consolidation, industry leaders coming together; it is no longer about who is controlling the business. We are also seeing inbound interest coming back. Outbound transactions have been selective and therefore mega or large outbound deals would be fewer compared to inbound deals.

What is at the heart of e-commerce M&A which is largely a winner-takes-all market?

Verman: We acquire companies for people. One of the things which we keep in mind is thinking of who will continue to stay with us. We have hundreds of millions of customers and we don’t spend on marketing anymore. So if we acquire someone it makes sense on making them continue. Myntra is a good example. We let them build their own brand. One of the core areas for our M&A strategy is ‘category’, where we think what are those categories which we have tried to build or where do we get acceleration in six-nine months. Today, we do have a strong customer base and we would acquire for core capabilities and not for customers. The capital which we have today allows us to be very aggressive. The second area of focus for M&A would be around thinking of how to accelerate profitability.

How are you using Big Data for your M&A decisions?

Verman: Data is at the heart of what we do. As a digital platform, we have the ability to see a customer’s behaviour. With data, we can keep a track of customer behaviour changing over time and that builds into a firm’s strategy. We acquire in areas where we see a gap in the product roadmap.

This article originally appeared in Live Mint.

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