Salary Survey – 2008

The HR function is a critical element for growth of any company. It has become strategic, because capital is now an easily available commodity, but people are not. So, the only constraint to growth is people. And that is a not a new problem for the Indian Industry. Emmay HR and BW have conducted this year’s Salary Survey, comprehensively by covering costs, compensation and benefits across 12 sectors.

Though HR has moved up the value chain, there is still conflict with other functions such as finance and marketing on the importance given to it. The rising importance of HR was first noticed when key professionals were hired or shifted to the function. Many top companies today have HR heads that are top performers and are not necessarily from within the HR function. And it’s happening in the opposite direction as well, with HR heads also moving into business roles in progressive companies. S.V. Krishnan, who headed Satyam Computers’ largest business unit, was chosen to lead Satyam’s HR function in 2007. He replaced Hari T, who moved on to a strategic role as head of marketing.

This changing role of HR in Indian companies has led to a recalibration of budgetary planning.Planning an HR budget? It is a complex job, as there are several new components to it. That level of involvement has come about because an HR budget today has to factor in components such as recruitment costs, retention costs, alternative compensation plans, and employer branding initiatives.

Recruitment costs have gone up immensely. Today, it’s about hiring the right recruitment agency. The cost of hiring such agencies includes a retainer fee and 30 per cent of the new employee’s annual salary. A new component in HR budgets is training cost. Expanding companies are hiring entry-level employees from other sectors. These employees need training before they can be deployed.

The need for training has been driven upon companies due to soaring levels of attrition. Sectors such as IT and BPO have traditionally witnessed 25-35 per cent attrition rate. Nowadays companies also have to invest in employer branding to help attract and retain employees. Wooing employees through offline and mainline media advertising is a new challenge for HR heads in other sectors.

Conclusion

The job market has imposed discipline on companies in terms of planning HR budgets. It has forced them to plan long-term to reduce regular and rising training expenses. Most companies today have in in-house training facilities. The growing companies have realized that they not only need to attract and recruit good talent, but simultaneously build a social architecture that allows these employees to achieve their goals within the company. This seems impossible without a strong HR function and the top management’s involvement.

Source: Businessworld Issue 29 January – 04 February 2008

What Does Employee Engagement Really Mean?

In 2006, The Conference Board published “Employee Engagement, A Review of Current Research and Its Implications”. According to this report, twelve major studies on employee engagement had been published. The Conference Board considered the responses from top research firms such as Gallup, Towers Perrin, Blessing White, the Corporate Leadership Council and others, and came up with a blended definition.

Accordingly, employee engagement was defined as, a heightened emotional connection that an employee feels for his or her organization, that influences him or her to exert greater discretionary effort to his or her work.

The Employee Engagement is the Conference Board’s synthesis of 8 key drivers of engagement. These offer concrete targets for development:

Trust and integrity – how well managers communicate and ‘walk the talk’.
Nature of the job –Is it mentally stimulating day-to-day?
Line of sight between employee performance and company performance – Does the employee understand how their work contributes to the company’s performance?
Career Growth opportunities –Are there future opportunities for growth?
Pride about the company – How much self-esteem does the employee feel by being associated with their company?
Coworkers/team members – significantly influence one’s level of engagement
Employee development – Is the company making an effort to develop the employee’s skills?
Relationship with one’s manager – Does the employee value his or her relationship with his or her manager?

Source: http://www.conference-board.org
Please read: Conference Board study by John Gibbons, Employee Engagement: A Review of Current Research and Its Implications.

Employee Engagement – Excerpts from the Gallup Survey

Tim Rutledge, In his book, Getting Engaged: The New Workplace Loyalty, explains that truly engaged employees are attracted to, and inspired by, their work (“I want to do this”), committed (“I am dedicated to the success of what I am doing”), and fascinated (“I love what I am doing”). An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work. Employee engagement is viewed as managing discretionary effort, that is, when employees have choices, they will act in a way that furthers their organization’s interests.

According to the Gallup Management Journal’s Employee Engagement Index 29% of employees are actively engaged in their jobs, 54% are not-engaged, and 17% are actively disengaged. The statistics on workforce engagement are surprising. Almost two third of the workers are either moderately engaged or not engaged, it is hard to ignore this wake up call.

Actively engaged employees: Today, employee engagement has become a growing management concern. Engaged workers make more money for the company. They contribute towards a healthy working environment. They stay with the organization longer and are more committed to quality and growth than are the other two groups of not-engaged and actively disengaged workers. Engaged employees usually need the least amount of attention from managers because they’re doing what they are needed to do. The challenge for managers comes when the signs of disengaging appear from an engaged worker. The symptoms need to be addressed immediately. Great managers spend most of their time with the most productive and talented people because they have the most potential.

Employees are usually hired to do three things:
1. Achieve the business outcomes of their roles
2. Contribute to creating a productive workplace
3. Drive customer engagement

A Manager should spend ample amount of time with his subordinates. He should get the individual to view his or her role from a broader perspective instead of from a narrow task-oriented point of view. They can help employees clarify how they can achieve their outcomes. Measurement of outcomes also becomes crucial. Good measurement includes regular feedback, aligns with outcomes and matches the expectations for the role. An effective leaders help the people to design and own their own goals, targets and milestones. Great managers provide coaching to facilitate progress of their subordinates.

Not-engaged employees: A special mention here is required of the Not-engaged employees. These employees tend to concentrate on tasks rather than the goals. They want to be told what to do. They have no real aspirations of their own. These employees tend to feel that their contributions are being overlooked. As a result they hang back and do the minimum because they don’t believe anyone cares. Effective managers take time out to have a dialogue about an employee’s strengths and how these can make a difference, leading to employee commitment.

Actively disengaged employees: They act out their discontent and sow seeds of negativity at every opportunity. They are indifferent to company goals and mission. The Gallup Organization estimates that there are 22 million actively disengaged employees that cost the American economy up to $350 billion per year in lost productivity, including absence, illness and other problems that result when workers are unhappy at work. Good managers will identify those who are disengaged and explore the reasons behind the disconnect to determine interventions can be made use of. Those who are actively disengaged may refuse to become part of any solution.

What employees want?

Here is a summary of what workers responding to the a Gallup survey said they what they want from their managers;
• Focus me
• Know me
• Care about me
• Hear me
• Help me feel proud
• Help me review my contributions
• Equip me
• Help me see my value
• Help me grow
• Help me see my importance
• Help me build mutual trust
• Challenge me

And how do you do that?

• Provide feedback and guidance
• Make real time to discuss problems
• Seek ideas and input from everyone
• Provide the resources to solve problems or to do a job well
• Give real recognition and/or reward
• Provide opportunities for people to develop their potential
• Keep the pressure to perform and achieve more with less realistic
• Provide opportunities for social interaction
• Train people how to resolve interpersonal conflicts
• Promote joy and appropriate humor within the office
• Be flexible; help people to actively balance work and home responsibilities

Yahoo! built out of Alliances, Acquisitions (and looking for Merger)

In 1994, Jerry Yang and David Filo, the two young PhD computer science students from the Stanford University, started compiling list of their favorite websites as a hobby. They also listed them on websites. They developed Web-searching software which helped in web search and indexing sites. They categorized and subcategorized their websites for better search result. The website in the early days was categorized under Art, Business, Computers, Economy, and Education and also subcategorized each of the categories soon became too cumbersome, as the number of websites in their list increased. Jerry Yang and David Filo named the search list Yahoo.

By January 1995, Yahoo, had 10,000 websites and was getting one million hits a day. However, the indexing was still done by humans. During the same time, Yahoo had to be moved out of the Stanford University server where it was hosted.

By this time, Yahoo had gained fame and respect and venture capitalists showed interests in investing in Yahoo against a pie of Yahoo. The industry had recognized the potential of Yahoo and AOL wanted to buy Yahoo for $2 million. However, both Yang and Filo declined the offer. The media covered these events in detail which helped Yahoo gain visibility. The feature story in Newsweek during that time coined the expression ‘did a Yahoo.’ This coinage was later modified to become the company’s famous slogan ‘Do You Yahoo!?’

Launch
In March 1995, Yang, Filo and Tim Brady (a friend of Yang) wrote the business plan for Yahoo. The business plan put forth the vision of Yahoo; to become the ‘TV Guide of the Internet.’ The business plan also focused on advertisers to help generate its revenues, without charging any fees from the users.

The plan also stressed the importance of Yahoo’s independence, editorial impartiality, brand equity and free service for the end users. The business plan also listed that the second-biggest source of income should be through licensing deals.
The business plan announced Filo as president and CEO, and Yang as chairman and CFO.

In March 1995, Yahoo was incorporated and in April the company got its first $1 mn venture funding from Sequoia Capital. As soon as venture funding was received, the founders put an interim management in place at Yahoo. Yahoo launched its website in early August 1995.

Yahoo Expansion

In April 1996, Yahoo launched Yahoo Japan as a joint venture with Softbank, with Yahoo and Softbank owning 40% and 60% respectively. However, in all other cases it always held the majority stake. In Europe, Yahoo launched as Yahoo Europe in United Kingdom, Germany and France along with rest of Western Europe with Ziff Davis Yahoo held 70% of the equity stake while Ziff Davis held only 30%.

Yahoo forged strategic alliances with different companies like Procter & Gamble, Walmart, Coca-Cola, Nabisco, Pepsi, Microsoft, and Real Networks. To improve its pure search capability, Yahoo licensed AltaVista’s search engine and to broaden its distribution, Yahoo forged deals with Compaq and Gateway which allowed Yahoo to put its button on the desktops of Compaq and Gateway PCs. However, Yahoo and MTV alliance to create, a music search engine failed soon after its creation.

Yahoo initially started as a search engine, but with alliances and joint ventures it slowly developed as a portal. Mostly growth happened through acquisitions. Some of the companies acquired by Yahoo were Flickr, Konfabulator, Upcoming.org, Del.icio.us, and Webjay. The new Yahoo search engine was built on the acquired technology from Inktomi and Overture. The new search engine created the best search technology for consumers and an effective advertising platform for the advertisers. Yahoo also launched Yahoo 360, a social networking service.

In long run, Yahoo has become a victim of success. The company had adopted the model of being a one-stop portal, offering all the services on its web site. Yahoo’s homepage had links to a host of products and services like e-mail, music, mobile, small business services, health, finance, games, movies, personals, etc.

Acquired Companies

2002 Hotjobs, Inktomi
2003 Overture,
2004 3721 Internet Assistant, Kelkoo, Oddpost, The All-Seeing Eye, Music Match, Stata Labs Inc, WUF Networks
2005 Verdisoft, Ludicorp Research, (Flickr), Stadeon, TeRespondo, Dialpad
2005 blo.gs, Konfabulator, Alibaba, Upcoming.org, Whereonearth, del.icio.us
2006 Searchfox, Meedio, Gmarket, Jumpcut.com, Adlnterax, Right Media, Kenet Works, Bix.com, Wretch

Strategic Alliances and Joint Ventures

During the same time, Yahoo initiated strategic partnerships. Yang’s objective of strategic partnerships was, to leverage relationships for future financing, rather than raising money. They zeroed on Reuters, and struck a distribution and revenue sharing deal with Reuters. The success of the yahoo – Reuters deal led Yahoo to bring together a pilot program of six advertisers like GM and Visa, each of which paid $20,000 per month.

As the number of paid advertisers along with the daily visitors in Yahoo’s website increased, few companies showed interests in investing in Yahoo. Reuters, computer-magazine publisher Ziff Davis, Japanese software publisher and distributor giant Softbank invested in Yahoo against a portion of its equity
stake. Reuters invested $1 mn for a 2.5% stake, Ziff Davis and Softbank each invested $2 mn for 5% stakes.

In 1999 when the dotcoms started to collapse in 1999, and the advertising market shrank, Yahoo had to search new ways other than advertising to make money. Yahoo started charging for some of its existing services, like auctions and personals and introduced new paid services, like extra storage space for email and photos, registration of personal domain names and tools for building personal Web pages. In 1999, Yahoo also entered the ecommerce business by introducing Yahoo Shopping where 9000 merchants joined. Yahoo also partnered with Kmart’s retail website, BlueLight.com, to provide free Internet access to the users, with the objective of attracting large number of new Net-savvy customers.

Yahoo! built out of Alliances, Acquisitions (and looking for Merger)

In 1994, Jerry Yang and David Filo, the two young PhD computer science students from the Stanford University, started compiling list of their favorite websites as a hobby. They also listed them on websites. They developed Web-searching software which helped in web search and indexing sites. They categorized and subcategorized their websites for better search result. The website in the early days was categorized under Art, Business, Computers, Economy, and Education and also subcategorized each of the categories soon became too cumbersome, as the number of websites in their list increased. Jerry Yang and David Filo named the search list Yahoo.

By January 1995, Yahoo, had 10,000 websites and was getting one million hits a day. However, the indexing was still done by humans. During the same time, Yahoo had to be moved out of the Stanford University server where it was hosted.

By this time, Yahoo had gained fame and respect and venture capitalists showed interests in investing in Yahoo against a pie of Yahoo. The industry had recognized the potential of Yahoo and AOL wanted to buy Yahoo for $2 million. However, both Yang and Filo declined the offer. The media covered these events in detail which helped Yahoo gain visibility. The feature story in Newsweek during that time coined the expression ‘did a Yahoo.’ This coinage was later modified to become the company’s famous slogan ‘Do You Yahoo!?’

Launch
In March 1995, Yang, Filo and Tim Brady (a friend of Yang) wrote the business plan for Yahoo. The business plan put forth the vision of Yahoo; to become the ‘TV Guide of the Internet.’ The business plan also focused on advertisers to help generate its revenues, without charging any fees from the users.

The plan also stressed the importance of Yahoo’s independence, editorial impartiality, brand equity and free service for the end users. The business plan also listed that the second-biggest source of income should be through licensing deals.
The business plan announced Filo as president and CEO, and Yang as chairman and CFO.

In March 1995, Yahoo was incorporated and in April the company got its first $1 mn venture funding from Sequoia Capital. As soon as venture funding was received, the founders put an interim management in place at Yahoo. Yahoo launched its website in early August 1995.

Yahoo Expansion

In April 1996, Yahoo launched Yahoo Japan as a joint venture with Softbank, with Yahoo and Softbank owning 40% and 60% respectively. However, in all other cases it always held the majority stake. In Europe, Yahoo launched as Yahoo Europe in United Kingdom, Germany and France along with rest of Western Europe with Ziff Davis Yahoo held 70% of the equity stake while Ziff Davis held only 30%.

Yahoo forged strategic alliances with different companies like Procter & Gamble, Walmart, Coca-Cola, Nabisco, Pepsi, Microsoft, and Real Networks. To improve its pure search capability, Yahoo licensed AltaVista’s search engine and to broaden its distribution, Yahoo forged deals with Compaq and Gateway which allowed Yahoo to put its button on the desktops of Compaq and Gateway PCs. However, Yahoo and MTV alliance to create, a music search engine failed soon after its creation.

Yahoo initially started as a search engine, but with alliances and joint ventures it slowly developed as a portal. Mostly growth happened through acquisitions. Some of the companies acquired by Yahoo were Flickr, Konfabulator, Upcoming.org, Del.icio.us, and Webjay. The new Yahoo search engine was built on the acquired technology from Inktomi and Overture. The new search engine created the best search technology for consumers and an effective advertising platform for the advertisers. Yahoo also launched Yahoo 360, a social networking service.

In long run, Yahoo has become a victim of success. The company had adopted the model of being a one-stop portal, offering all the services on its web site. Yahoo’s homepage had links to a host of products and services like e-mail, music, mobile, small business services, health, finance, games, movies, personals, etc.

Acquired Companies

2002 Hotjobs, Inktomi
2003 Overture,
2004 3721 Internet Assistant, Kelkoo, Oddpost, The All-Seeing Eye, Music Match, Stata Labs Inc, WUF Networks
2005 Verdisoft, Ludicorp Research, (Flickr), Stadeon, TeRespondo, Dialpad
2005 blo.gs, Konfabulator, Alibaba, Upcoming.org, Whereonearth, del.icio.us
2006 Searchfox, Meedio, Gmarket, Jumpcut.com, Adlnterax, Right Media, Kenet Works, Bix.com, Wretch

Strategic Alliances and Joint Ventures

During the same time, Yahoo initiated strategic partnerships. Yang’s objective of strategic partnerships was, to leverage relationships for future financing, rather than raising money. They zeroed on Reuters, and struck a distribution and revenue sharing deal with Reuters. The success of the yahoo – Reuters deal led Yahoo to bring together a pilot program of six advertisers like GM and Visa, each of which paid $20,000 per month.

As the number of paid advertisers along with the daily visitors in Yahoo’s website increased, few companies showed interests in investing in Yahoo. Reuters, computer-magazine publisher Ziff Davis, Japanese software publisher and distributor giant Softbank invested in Yahoo against a portion of its equity
stake. Reuters invested $1 mn for a 2.5% stake, Ziff Davis and Softbank each invested $2 mn for 5% stakes.

In 1999 when the dotcoms started to collapse in 1999, and the advertising market shrank, Yahoo had to search new ways other than advertising to make money. Yahoo started charging for some of its existing services, like auctions and personals and introduced new paid services, like extra storage space for email and photos, registration of personal domain names and tools for building personal Web pages. In 1999, Yahoo also entered the ecommerce business by introducing Yahoo Shopping where 9000 merchants joined. Yahoo also partnered with Kmart’s retail website, BlueLight.com, to provide free Internet access to the users, with the objective of attracting large number of new Net-savvy customers.