Managing people for the first time, post-appraisals, ties most people in knots. Mahima Puri from Economic Times suggests how you can pass the test.
Learn to Delegate Most first-time managers make a few fundamental mistakes, such as of not being able to delegate the work effectively. “Being successful as a leader does not mean doing everything yourself, but how effectively you get the work done from others,” says Mohinish Sinha, leadership and talent head, Hay Group.
Set Clear Roles Each member of the team should be clear about his or her role and responsibility in the team. “A first time manager could make sure the he meets the team regularly. This will help clear the confusion,” says Gagan Adlakha, partner at HR consulting firm Vyaktitva.
Know your Team A good manager should always get to know his team members better. “Each team member would have different aspirations. A good people manager should work towards creating opportunities for his team, in sync with their desires,” says Sinha.
Listen Well Receiving and giving feedback are both important. “Instead of showing off his knowledge and preaching, a good manager tries to blend in well with the team,” says A Sudhakar, ED -HR, Dabur India.
Work on Yourself A first-time manager needs to work on his or her weaknesses, to begin with. “One has to consciously adapt to being a manager and develop their own leadership style,” says Sudhakar. “They need to address issues over a period of time,” adds Sinha.
Indian CEO salaries touching their western counterparts
Sridhar Ganesan (Practice Leader – Reward Services – India and South Asia, Hay Group)’s interview on Human Factor
Sridhar Ganesan deliberates the phenomenon of Indian CEO salaries touching counterparts in the Western world.
Sridhar works to solve any compensation problem that proves intractable, and was instrumental in building the compensation and benefits survey practice of Hay Group in India. He works in the areas of cascading business strategy to define operating models, organisation design, job modelling, and developing reward strategies. Interview excerpts:
Q. Are you worried that India is treading on the same path as the US in high executive compensation, despite factoring in the high rate of inflation?
A. Over the year, Indian CEO salaries have touched Western world counterparts on a purchasing-power-parity basis. The talent pool for Indian CEOs in India reflects two important trends:
1. Employability of the CEOs across various sectors.
2. The CEO pool has become global. Executive search firms are looking at a global pool for recruitment of CEOs for Indian companies.
The trend reflects in some of the India CEO appointments. For instance, Heidelberg Cement India, the global cement major recruited an Indian investment banker as the CEO of its India operations. Tata Motors, the Indian automotive giant recruited an expatriate to become the Group CEO.
These developments make two key trends visible. First, typical Indian CEOs, besides being operationally excellent, are lacking in terms of managing business. Therefore, companies are looking at a scarce pool of holistic managers, which drives compensation high; otherwise, expatriates could come in for short-term assignments and create the next line of managers. Global MNCs prefer to consider India as an entity in their global ecosystem; therefore, they align India to the global job rotation policy/compensation programmes. Second, promoter-owned organisations have typically had the owner/promoter as the CEO. Growth-oriented companies have been changing the convention, by bringing in professional CEOs, while the owner/promoter drives governance and business direction. This also boils down to recruiting the best, which implies that the multipliers in salaries are still a reality. Taking an example, an engineering company could not recruit a Sales Head for a year as the salary ranges that were being asked for were above the provided CEO remuneration. Eventually, the company decided to move into the development of internal talent.
With all the above happening, remuneration committee activism is also becoming a reality, as we deliver assignments for them. The remuneration committees are deliberating the rewards philosophy and quanta for the top team in detail. They are no more rubber stamps.
In summary, the talent scarcity at these levels still drive multipliers to executive compensation, but highly active remuneration committees are bringing a reality check to the process.
Q. What are the key differences in executive compensation of MNCs operating in India and the home-grown Indian companies?
A. MNCs in India have the positive legacy/framework, of roles and salary ranges being defined clearly; they have an objective orientation where executive roles and their respective salaries fit within a framework, factoring in both internal affordability and external competitiveness.
Indian companies have always been people-centric at the executive level, which has also caused the maximum chaos as they build global organisations. They are unable to deal with top management inequities in an objective and transparent manner. Indian companies have started moving along this journey, so executive compensation has some science to it, rather than ad hoc decisions of some stakeholders. This will also help salaries to become numbers affordable to be paid by companies and aligned to market principles.
How some of India's most admired companies fared on leadership.
Hay Group has partnered Fortune magazine for the World’s Most Admired Companies study since 1997. Adopting a similar peer-ranking methodology here, Fortune Indiapublished its first India’s Most Admired Companies study. Among nine criteria that Hay Group asked executives, directors and analysts to rank companies on (in their industry) was leadership.
For the purpose of the study, leadership was defined thus: ‘The extent to which the top management plays a formative role in effectively and consistently charting a strategic direction for the company.’
Gaurav Lahiri, Managing Director, Hay Group India, points out that a comparison of companies in different industries by criterion might not give an apples-to-apples comparison. That said, the top five by criterion score published here are from a shortlist of 425 companies, across 15 sectors. From 291 companies, 507 executives with a minimum of 12 years of work experience participated. Of these, 11 per cent were CEOs, MDs or Chairpersons, and another 25 per cent Vice-Presidents and above.
The risk associated with such industry research being led by corporate brand perception rather than reality on ground, is negated because of respondent profile, explains Lahiri.
“They have a better understanding of what companies in their industry are doing. So there is a granular understanding of multiple aspects of the business. The study is driven by the fundamentals of the organisation as opposed to the general perception,” he says.
The claim is that in the World’s Most Admired Companies list, which follows the same methodology, the ratings correlate with stock performance.
He adds, “By and large, the companies doing well in the survey have outperformed their peers. In bad times, they have been much more resilient than those rated lower. In good times, they have done better.”
The New Manager caught up with Lahiri for a commentary on what could have impacted some of the ratings, and hence rankings.
There are many reasons that make a company successful and you can’t deny that there are equal number of reasons that make a company admirable. Judging the companies on myriad platforms, Fortune India in collaboration with global management consulting firm Hay Group has listed India’s 50 Most Admired Companies, for the first time, in its March issue.
The Tata Group dominates with three group companies featuring in the top ten list of India’s most reputed companies. Tata Steel has topped the list, becoming India’s most admired company. Tata Consultancy Services (TCS) has ranked top among companies in the IT, ITES, BPO industry and Tata Motors led in the automotive industry.
Corporates are rated on the parameters of consistency, quality, talent management, corporate governance, social responsibility and delivering value to investors. The cover story also includes the sectoral rankings, covering 15 key sectors.
Hindustan Unilever and Colgate Palmolive are placed at the second and the third place in the list followed by Cadbury India. No public sector undertaking features in the first top ten most admired companies. However, PSUs in the Oil and Gas sector like the ONGC, Bharat Petroleum Corporation and Indian Oil and Hindustan Petroleum are ranked 16th, 17th, 19th and 20th respectively in the list.
Gaurav Lahiri, Managing Director of Hay Group India, said: “Hay Group India is pleased to partner with FORTUNE India to roll out the inaugural edition of India’s Most Admired Companies. This initiative furthers the tremendous success of our collaboration with FORTUNE globally, on the World’s Most Admired Companies rankings. The India list will prove to be a conclusive guidebook to corporate India’s emerging and existing stars and demonstrates the most progressive and effective market players across industries, as measured by company’s peers within the industry.”
The companies were shortlisted from 15 industries on the basis of their size, contribution to national GDP, growth rate, maturity of industry, competition within the industry, the minimum number of players in the industry and their national presence.
Variable pay is, more than most compensation applications, an approach by which organizations can align employee behaviors and efforts to the business plan and operating model; the quantum being an outcome variable. It can help employees understand what is expected of them and why, thus communicating business priorities to the workforce.
The instability of the global economy has led companies to re-examine their variable pay programs in many ways:
Shift in balance between fixed and variable pay, with stronger ties to performance
Increased board-level involvement
Linking bonuses to longer-term targets
Balancing individual and enterprise performance in designing bonuses
Simplifying programs by reducing the number and variety of bonus schemes
Apart from the slowdown, Hay Group research has found that the following are the top three drivers of change to variable pay programs, going forward: better alignment with business strategy; improving company or team performance; and creating better alignment or line-of-sight between corporate and individual performance.
As organizations look to the change process, there are three things they must keep in mind:
Balance Stimuli and risk: If a bonus scheme fails to pay out in a bad year, employees can become disengaged at a time when the company needs them most. Conversely, a bonus scheme that pays out regardless of corporate performance will not drive discretionary effort. The challenge for companies is to not only identify the right measure, but the right targets. Should the target be absolute or relative? Should it be in line with this year’s budget or with last year’s performance? At which level should performance targets be set? Should average performance be awarded, or only excellent performance? There is no one correct answer: The best programmes are those that reflect the company’s particular business model and culture, rather than those which are copied from ‘best practice’ or industry standards.
Employee Engagement is paramount: Employees will no longer be happy ‘just to have a job’ and companies need to find effective ways to prevent loss of talent as market conditions improve. Hay Group Insight research has shown that companies with the most engaged employees report revenue growth at a rate two-and-a-half times greater than their competitors with the lowest level of engagement. Furthermore, companies who effectively combine employee engagement and enablement report significantly improved revenue growth, staff retention and employee performance.
Measuring effectiveness is critical…: More and more CEOs are focusing on the ROI from their reward spend, and we see this trend continuing strongly in the future.
As is communication!: Effective communication has a significant role to play in the success and buy-in for reward programmes. Here, companies are realising the crucial role of the line managers in communicating variable pay schemes. A variable pay strategy will not drive performance if the objectives and link to company strategy are not clear. The message must flow from the top, with strong leaders who can set out a coherent strategy and help employees understand their role in it. Leaders must also rise to the challenge of demonstrating and communicating externally the link between reward strategy and company performance.
The best organizations are using variable pay not purely as a cash flow tool but as a support mechanism for their performance management strategy.
Some of the most successful variable pay programs are those which reflect the company’s business model and work culture; take into account the impact different employee groups have on performance; are tailored to employee preferences and demographic profiles; and are fully integrated with the overall reward programme.
In a challenging business environment, companies must make the right call on strategy and performance if they are to take full advantage of their variable pay programs. A strategic approach to variable pay is critical to remaining competitive in a challenging market.
Hay Group reveals "Best Practices" of the FORTUNE Magazine World's Most Admired Companies
For 15 years, we have conducted research to identify the factors that distinguish the World’s Most Admired Companies (WMAC). During that time, we’ve seen companies from GE to Amazon.com to Apple top the list of WMAC. So, what is it that makes these companies so successful?
Taking a look back at our research conducted during the past 15 years, we discovered that there are four consistent themes among the WMAC that enable them to financially outperform their peers, attract and retain top talent and successfully adapt to economic and global changes.
The four business practices that contribute to the WMAC success are:
Executing and enabling strategy
Aligning structures and processes to sustain long-term performance
Achieving success through people
Placing a high value on leadership and talent
But, the question remains: How do the WMAC incorporate these ‘best practices’ into their organization and more importantly, how can you do the same? How can you help enable greater success for your organization?
Implementing these four practices is critical to becoming a WMAC. Here’s what it takes:
1. Put strategies into practice. Clarity is crucial. WMAC ensure strategic objectives are clear at every level and align all business units around a common strategic vision. They also understand the importance of culture – embodied by attributes the organization wants to encourage, support and reward – and it’s alignment with the businesses intent and go to great lengths to make sure employees ‘fit’.
2. Align enduring structures and processes. WMAC engrain innovation into their companies, maintain an active focus on growth and manage people for the long-term. When a downturn or crisis strikes, these organizations rely on well grounded plans versus overt course changes to sustain performance and weather the storm.
3. Enable your people to succeed. WMAC recognize that their people are the key drivers of organizational success and therefore, they focus on creating the right conditions for their people to thrive. The WMAC recognize that in addition to providing training and development, you must also engage and enable your employees to produce results.
4. Invest in your leadership and talent. In order to get the right people to drive success, organizations must place a strong emphasis on attracting and developing talent and, investing in and designing reward programs that align with their strategic vision. WMAC promote a ‘total reward’ approach that makes best use of both tangible and intangible rewards.
While there may not be one specific algorithm that will contribute to success for all organizations, beginning to recognize and implement these core practices is the first step in the equation.
Are there other factors that you’ve experienced and would cite as critical to the foundation of organizational success?