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Hurconomics for CEOs

HR Interventions in Indian Companies

Many Indian corporations, their CEOs and HR directors have shown innovativeness and openness to change by initiating and managing modern HR interventions. However, it is common practice to abandon some of them after an initial trial period. Often, when such initiatives are given up, one of the reasons given is ‘We spent money but got very little out of it. The ROI is inadequate.’ It is worth examining why this is so and how the ROI on these interventions can be improved.

The following interventions have been made in the recent past in Indian companies:

• Competency mapping
• KPA-based performance management systems
• 360° feedback
• Psychometric testing
• Training programmes, particularly soft skills
• Assessment and development centres
• Leadership circles
• Change management programmes
• HRD audit
• Scientific recruitment

Flaws in Indian Organizations

Several studies from the West have indicated that good HR practices make a difference and have a significant impact on the shareholder value, market capitalization and intellectual capital-building of the corporation.

Jac Fitz-enz has demonstrated in his book on ROI on human capital (Fitz-enz 2000) that high-performing companies (those that figure within the top 25 per cent of 1,000 firms) were found to have high scores on HR practices, including balanced values, long-term commitment, culture and systems linkages, partnering, collaborating, innovation and risk management, communications and competitive passion.

I have found that the following 10 flaws in Indian organizations prevent them from getting the best ROI from HR interventions:

1. There is improper/inadequate briefing from HR directors or HR consultants.
2. They don’t allow enough time for ROI.
3. The HR interventions lack a business focus and are focused more on the intervention itself.
4. CEOs and HR directors invest very little and want quick returns while HR interventions give long-term benefits.
5. Often intervention providers are changed halfway through the process, or there is inadequate follow-up.
6. Commitment is lacking.
7. After the initial euphoria, there is a rapid shift from one intervention to another.
8. There are high expectations or sometimes a lack of understanding about what to expect from certain interventions.
9. There could be too strong a business focus or a complete lack of intervention focus.
10. CEOs and HR directors don’t have an eye for the returns and are unable to appreciate them. They can’t see the intangibles behind the tangible outcomes or tangibles after the intangible interventions.

I would like to examine these problems one by one and suggest possible ways out of these situations.

Problem 1: Improper briefing/inadequate understanding of intervention

Let us investigate the causes of and possible solutions for this problem.

Why does this occur?  CEOs don’t have enough time to understand and appreciate the benefits of a given intervention. HR directors don’t brief them fully and properly. For example, 360° feedback is introduced as a tool to identify competent top-level managers and ensure the promotion of the right people, while in reality 360° feedback is an awareness creation and leadership-building tool.

What solutions are possible?  Understand what the intervention does, how much time it takes to get results and what exactly a given intervention’s long-term and short-terms benefits will be. Don’t expect magical solutions to long-term problems. If the leadership potential is weak, 360° feedback can’t change it. If, after 360° feedback, no follow-up support and accountabilities are established, the intervention will not have helped much. Similarly, things don’t change after one-day or one-week training programmes. They need to be followed up and support is required.

Problem 2: Insufficient time for ROI/impatience and inadequate follow-up

The causes of this problem and the possible solutions are as follows.

Why does this occur?  Some CEOs and HRD professionals/departments, expect dramatic results after HR interventions. For example, if 360° feedback doesn’t improve the quality of leadership in a short period, the CEO and HR director give up and resign themselves to the situation.

What solutions are possible?  Plan and provide for good follow-up support for each intervention. Articulate the nature of returns from the beginning and help everyone understand what can be expected realistically from each intervention. Have appropriate measures. If PMS is intended as a tool to measure time management, demonstrate the benefits in time saved, costs saved and clarity obtained after the PMS.

Problem 3: Lack of business focus/more focus on intervention

Let us investigate why this problem occurs, and what can be done to resolve it.

Why does this occur?  PMS is not introduced for its own sake but is meant to achieve something, say promoting role clarity, accountability or reducing coordination issues. Often, introducing an intervention itself becomes the focus, and the reason for introducing it is forgotten. How competency mapping or 360° or PMS is managed becomes the talk of the company rather than what is expected from these measures.

What solutions are possible?  Keep the focus intact. Keep measuring achievements, and tangible and intangible outcomes.

Problem 4: Too little investment by CEOs and HR directors/expectation of quick returns

The causes of Problem 4 and its possible solutions are as follows.

Why does this occur?  Sometimes CEOs or HR directors spend a great deal of time negotiating the project, but once it begins they disappear from the scene. They don’t give it enough time or attention. Some interventions need their time, involvement and continued support. Support must be provided in real and visible terms. If the CEO does not subject herself/himself to 360° feedback and demonstrate commitment to change, she/he can hardly expect her/his juniors to take it seriously. Similarly, if the HR director does not set KPAs for her/his staff, she/he cannot expect the system to succeed.

What solutions are possible?  Give HR interventions your full time and attention if you consider them to be important. Don’t introduce too many interventions if you can’t follow them through. Ensure that interventions are implemented.

Problem 5: Change of intervention providers/inadequate follow-up

Let’s see why such changes or lack of follow-ups occur.

Why does this occur?  Some CEOs are like children. They like to play with every new tool (toy) they come across but discard it once their curiosity is over. The toy provides entertainment value but can’t yield results. This happens particularly when the CEO has made a small investment in the HR intervention.

What solutions are possible?  Don’t keep changing your consultants too often. Engage a few and keep working with them until the HR objectives have been achieved. Some consultants like to withdraw too soon as they don’t want to take responsibility for results. Continue to work with them until the project is complete and you have results to show for it. Plan from the beginning for reasonable involvement and tangible results. Learn to stay with an innovation or a practice you have initiated, unless you have ample proof that it is not working and it is time for a change.

Problem 6: Lack of commitment

The causes of lack of commitment and the possible solutions for this problem are as follows.

Why does this occur?  This happens mostly due to multiple commitments. Indian managers have a relatively short attention span. They like to shift gears fast from one task to another. They want quick results. HR investments do not give quick results. It take two to three years for a performance management system or any other culture-building initiative like TQM to show results. One needs to be patient and persevering.

What solutions are possible?  Both CEOs and HR managers need to be exposed to other countries’ experiences and be helped to understand the nature of ROI on HR investments. Quick wins are difficult in people-investment areas. However, HR managers should constantly be alert to such possibilities and plan interventions.

Problem 7: Quick shift from one intervention to another

The causes of this problem and the possible solutions are as follows.

Why does this occur?  Sometimes more time is spent on changing the system and little time on stabilizing it or ensuring its effective implementation. As new methods and new systems emerge managers tend to shift their focus.

What solutions are possible?  HR managers also need to sensitize themselves and their CEOs to the invisible growths in intellectual capital.

Problem 8: High expectations/lack of understanding about what to expect

The causes of unrealistic expectations and its possible solutions are discussed here.

Why does this occur?  Every time a new system is introduced, Indian managers expect that all their problems will be solved. They are unable to see the small linkages and impatient to see quick benefits.

What solutions are possible?  Scale down the expectations from the beginning and keep the focus on what the system intends to achieve. For example, if the purpose of the PMS is to help people to improve their performance by planning their work, remain focused on how plans can be improved and how they can in turn give financial benefits. Benefits need to be brought to surface. They may not always be reflected in the balance sheet.

Problem 9: Too strong a business focus/complete lack of intervention focus

The causes of Problem 9 are as follows.

Why does this occur?  There is a tendency to have an eye on the dollar benefits all the time. If a CEO or HR manager keeps checking the score board, they will not be able to play the game well.

What solutions are possible?  Remain focused on the game and the system, and not always on the score board. This capacity needs to be developed in CEOs and HR managers.

Problem 10: Lack of appreciation of returns/failure to see intangibles and tangibles

Let us see why this problem occurs and how it can be resolved.

Why does this occur?  This could be because of a variety of factors, but particularly because of lack of awareness and sensitivity. Many CEOs are accustomed to have a single-minded focus on revenues and fail to see the linkages between revenues and factors contributing to revenues.

What solutions are possible?  Educate CEOs, HR managers, line managers and the top management. Show them the linkages between HR investments and returns over a long period. Sensitivity can be created through researched reasoning. Simple things like revenue per employee, cost per employee and competitor information over a period of time can go a long way in educating them. They should also be exposed to articles and essays from leading business magazines like the Harvard Business Review, and books such as, among others, Norton and Kaplan’s Balanced Score Card (Kaplan and Norton 1996), Jac Fitz-enz’s ROI on Human Capital (Fitz Enz 2000) and HRD Score Card 2500 (Rao 2008). There is no substitute for continuous education and information.

How Time Gets Spent: A Guide to Enhancing Value Addition

The time of the top management—chairman, MD, CEO, COO, SBU heads and other directors—is a very important asset/commodity. It should be managed well and carefully in order to give strategic direction where needed.

The higher you go, the lonelier it gets. There are only 365 days in a year and sometimes one or two years only for you as CEO to make a mark—the current year and at best the next year. No one sees or remembers beyond that: which means that you have only about 4,000 to 5,000 hours to make a difference in the next one or two years. In fact, I would say you have only about 3,000 hours to make a difference in the year following your appointment. Looking at it another way, there are 52 Sundays in a year. You need Sundays for self-rejuvenation and renewal. You need to spend with your family, and relax your body and mind. Don’t ever do any business or work on Sundays, though you might find yourself working on Saturday. Take out another 13 days in the year for festivals. You are then left with only 300 days, and every day gives you, at best, ten hours of productive time.

Let us see how your time goes. If you live in a city like Mumbai and have to travel to your office, you will spend 30 minutes to 90 minutes one way, and therefore about 60 minutes to 180 minutes commuting.

Your daily exercise, yoga and other morning preparations for the office, including breakfast, take another 120 minutes.

You may, at best, have about 10 productive hours if you begin your work at 8.00 a.m. and can continue till 8.00 p.m. without any further exercise for the rest of the day. Of the 12 hours you have left, two hours are spent travelling, having lunch and tea, and the occasional chat with colleagues.

Thus, you have 10 precious hours and a total of about 250 hours a month. For an ordinary executive, we normally put a cap at 2,000 hours per year.

For a hardworking executive who spends about 10 hours a day and 300 days in a year, 3,000 hours is a very realistic estimate. In fact, most executives in the peak of their careers work hard.

Now, you have to use these 2000 hours to make a difference to the organization. You have to do all of the following:

• Manage the current operations of your company and make sure they run smoothly
• Travel to other cities or countries to negotiate major business deals or meet key customers or suppliers
• Keep yourself informed of the various critical events and things happening in your company I Manage meetings with your staff
• Plan and monitor the performance of your top team, key individuals, role holders
• Learn about the changing markets, competition, competitor’s experiences, practices
• Articulate the vision and plans for the future of your organization
• Manage and announce monthly, quarterly, half-yearly and annual performance reports
• Manage the finances of your company
• Deal with any crisis occurring in the company
• Read and learn about new developments
• Attend conferences, seminars and meetings where you get an opportunity to meet other CEOs, industrialists, specialists
• Meet visitors and other people of interest who add value to, or receive value from, your company
• Attend telephone calls, dictate letters, correct drafts, oversee the upkeep of your office and see if it is aesthetically organized (housekeeping jobs)

A large part of your time may be spent in meetings. You may not even realize just how much time is being spent in them. In the case of one unit head, when I started working with him to assess his time, we found that he spent as much as 60 per cent of his time in meetings. Every day he would have a meeting with all his heads, totalling two hours on average. He found he was discussing the same problems over and over with all of them every day. And most of the time he was doing the talking. There were also weekly meetings, monthly seminars and other unscheduled meetings with the head office, and so on. It was not too difficult to understand that the unit head was obsessed with day-to-day activities and micro management. Everyone preferred to take decisions in the morning meetings after his lectures and preferred that he took the decisions so that he could solve the problems and then create an agenda for the next meeting. The organization had become a routine organization with an enormous waste of human talent.

CEOs should manage their time well and enable others to manage their time.

The R-COT and O-COT described in the beginning of this chapter gives you a way of valuing your and others’ time and managing them. I keep telling people about ways of calculating the cost of time. At TVRLS, we have evolved a methodology for organizations, the details of which are given in Chapter 1.

Some tips:

1. Be aware of where your time is being spent.
2. Assess the way you are spending your time. Use Table 12.1 at the end of the chapter to assess the various heads under which your time is being spent.
3. Use your secretary or an executive assistant to do this for you. You could even hire an MBA for a couple of months to do the job or get a management trainee to do it for you.
4. Then assign a cost to your time. Use Table 12.2 at the end of the chapter to calculate how much your time is costing your company.
5. Find out in which areas you need not spend time and how you can get by with lower costs, and a faster and better way of performing the same task.
6. Brief your office team (the CEO’s office team or the executive assistants or secretaries).
7. Determine the priorities for the stage the company is in at present. Some companies may need a lot of PR during particular periods, and some others a lot of internal management and housekeeping. You need to be sensitive to the needs of your company.
8. Discuss with your colleagues or top team the way your time is being spent and seek suggestions from them.
9. Work out a personal plan of delegation and recruitment of competent people to do some of the things you are doing. Decide the critical areas where you are needed. Decide the organizational priorities and assess who else can do this job at lower costs, equally or more effectively.
10. Sensitize yourself and others about the cost of time.
11. If you don’t plan your time, others will plan it for you; if you don’t plan your priorities others will plan your priorities for you. You may unwittingly end up working for others while your company is paying you to do something else. Make sure you avoid this and add value to your company, yourself and your customers.

Ten areas in which CEOs need to spend time

Which of the following 10 areas are taking away a large part of your time?

1. MIS and systems
   • Daily or weekly performance monitoring and review
   • Planning and implementing systems
   • Learning about events in the company
   • Giving instructions
   • Problem-solving
2. People management
   • Allocating tasks
   • Monitoring performance
   • Listening to complaints
   • Appraisals
   • Communications
   • Incentives, rewards and recognition
   • Recruitment
   • Development and review
   • Coaching
   • Directing, reprimanding
3. Envisioning and strategy
   • Sharing ideas
   • Listening to ideas
   • Testing ideas
   • Visiting benchmarkable companies
   • Developing strategies
   • Collecting competitor information or assimilating information
   • Internal SWOT studies
   • Consultant reports, task forces and seminars, training programmes
   • Reading and strategizing, discussions about strategies
   • Systems development for converting strategies into operational plans
4. Planning and goal-setting
   • Setting goals, short-term and long-term plans
   • Appointing task forces, listening to them and monitoring their work
5. Customer management
6. Stakeholder management
   • Investor management
     
     
7. Financial management
   • Financial planning
   • Fund management
   • Monitoring finances
   • Looking into legalities and ensuring compliance with statutory obligations
8. Board management
   • Board meetings
   • Quarterly reviews
9. Public relations and brand-building activities
   • Ceremonial roles
   • Presentations about the company to visitors and other dignitaries
   • Socializing and networking
   • Media
   • Internal communications
   • Ceremonial meetings and parties
10. Actual execution (especially important for small and medium enterprises)
    • R&D activities
    • Online work
    • Solving problems using technical expertise
    • Making calculations on the computer
    • Taking someone else’s functions into own hands and doing it to set an example; carrying out quality checks oneself.

Five modes of spending time

The following are the five sets of questions to assess how your (the CEO’s) time is spent.

1. Visitors: What kind? How much of your time gets spent on the following?
   • Friends
   • Business magazines and other media people
   • Your own employees
   • Family members/relatives
   • Casual visitors
   • Customers
   • Suppliers
   • Investors and other financiers or stakeholders
   • Consultants and salespersons
2. Travel: How much time; what kind of travel; for what purpose; what is the amount of time spent on travelling and waiting; and how do you use your time with regard to the following?
   • Travel to office
   • Travel to visit customers? Suppliers? Competitors
   • Travel for business/to collect benchmarking information
   • Professional travel for training and your own learning
   • Travel for monitoring the company
   • Communications travel (that is, to communicate with and enthuse employees or customers)
3. Meetings: What kind of meetings? How many of these demand your personal attention? Can you make do with only the minutes? Is it enough to join the meeting at the end and give your comments, if you have a habit of talking all the time at meetings? Or perhaps you could start the meeting and then join the others at the end. Make sure you understand the extent to which these meetings are related to operational matters, or related to the future, resources, planning, problem-solving or crises. Get your executive assistant to analyse the following kinds of meetings and give you feedback about the person-hours spent. The time spent on meetings can be analysed by the source and some kind of cost-benefit analysis can be done.
   • Two-person meetings
   • Group meetings
   • Planned and predictable meetings
   • Unplanned meetings
4. Telephone calls: Consider the following:
   • From where do you get most of your calls?
   • Are they routed through your office?
   • How strong and controlling is your office? Have you briefed them adequately? Are they aligned with your priorities?
   • Is there an escape window?
   • Do you dealing with habitual callers and time wasters?
   • Does your office have a system of analysing how much of your time the calls are taking, and giving you feedback?
5. Individual work: Consider how much time you spend on:
   • Decision-making
   • Reading
   • Listening
   • Taking decisions
   • Internet surfing
   • Dictating letters or writing personal emails (Some CEOs prefer to answer their own emails and in the process accumulate a lot of mails and also give emotional responses. They may also take time in terms of their typing speed. Some are never satisfied with their drafts and they need a lot of time to check and recheck.)
   • Making self-initiated telephone calls

Personal effectiveness and time management

Robin Sharma (2003: 175) says,

Visionary leaders have a clear sense of their destination and exactly what things they need to accomplish to reach it … They know intimately their high-yield activities, those that result in the progress they need to make in order to get to where they want to go. Anything else is a waste of their precious time and they disregard it…. The real secret of personal effectiveness is concentration of purpose.

Robin Sharma further suggests that concentration is the secret of strength in war and in trade; in short, in the management of human affairs. In leadership, there are activities that are worthy of your energy and attention and there are activities that are unworthy of them. Once we figure out which ones to focus on and then have the self-discipline to carry them out, our effectiveness as a leader will come to the fore.

The first thing we need to do is set aside a period of time for ‘a weekly planning practice’. This might be half an hour on a Sunday night or first thing on a Monday morning. Once we have figured out when we are going to do our planning every week, there are five key steps we must follow to ritualize the endeavour and ensure that every action you take during the coming week brings you closer to your ultimate goal.

According to Sharma, the first step is to revisit our future vision. We should silently consider the vision statement we have developed not only for our company but also for our life. We need to envision what ultimate success will look like both professionally and personally. This will remind us of where we are going and renew our sense of purpose. We then need to connect deeply to what the global view will be when we reach our destination and how our family life will look once we become the kind of spouse and loving parent we hope to be. Revisiting our vividly imagined future will keep us inspired and focused on the things that count.

The second step, according to him, then requires us to review the annual victories we have determined are worthy of achieving this year.

The only way to survive the incredible barrage of choices coming at us is to have a predetermined game plan. If we have one, we will have created a framework that will allow us to select only those choices that will advance our purpose. We will begin to be the master of all the choices rather than their servant. As the novelist Saul Bellow once wrote, ‘A plan relieves you of the torment of choice.’

In the third step, Sharma suggests that we focus on weekly victories by asking ourselves what weekly victories or little goals we want to accomplish over the week. Visionary leaders focus on the best and delegate the rest.

The fourth step is to incorporate our weekly wins into the planning of the daily schedule. Sharma (2003: 183) says, ‘If your priorities don’t get put into your planner, other peoples’ priorities will get put into your planner.’ And the fifth step is to reflect regularly on how we are spending our time. Reflection is the mother of wisdom and wisdom allows us to make wiser choices and enables us to lead a richer personal and professional life.

In The Monk Who Sold His Ferrari, Sharma talks about the futility of dwelling on negative thoughts about all the little things that have happened to us in the past, such as ill-treatment from a co-worker or financial problems we have faced. He believes that, by focusing on such repetitive negative thoughts, we are blocking the enormous potential of our minds to deliver into our lives all that we want and wish for. We often don’t realize that mind management is the essence of life management.

 

TABLE 12.1 10×5 matrix of how time is spent (for CEOs and HODs) (To be filled in by executive secretary/office)

 

TABLE 12.2 Cost of CEO’s/HOD’s time (Calculated at 2,400 hours per year or 200 hours a month)

References

Jac Fitz-enz, 2000, The ROI on Human Capital: Measuring the Economic Value of Human Performance, New York: AMACOM.

Kaplan, Robert S. and Norton, David, P., 1996, The Balanced Scorecard: Translating Strategy into Action, Cambridge, MA: Harvard Business School Press.

Rao, T. V., 2008, HRD Score Card 2500, New Delhi: Response Books.

Sharma, Robin, 2003, The Leadership Wisdom, Mumbai: Jaico Publications.