Get your start-up people equation, right!!!

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People are key. People are core to any organization’s success. And people are the competitive advantage or tangible assets of any knowledge organization. How many times each of us would have heard this before? While it is true that start-up HR policy or what we call People equation is critical not much has been written about the mechanics of getting it right when you are a new venture. Building on our past two covers, which focused on building the right model and then sustaining it, in this cover feature, we focus on tips and insights from successful entrepreneurs on how to get the People equation right?

 

Before we move into tips and insights let us get one thing clear. There is not much difference between HR policy for a new venture and an established organization. The only difference according to Lakshmikanth is the fact that while in the start-up phase most of the policies etc are in the mind of the promoter/core team, in the established phase they are well-documented and systemized. Having said that it needs to be acknowledged that the adaptation, implementation and mechanism of delivery do differ significantly.

 

Let us address the first question, first. Do you need to have a proper HR policy in place right from day one? The clear answer is yes. But, hang on. There is a difference. The HR policy at the start stage as it involves and addresses few people who need to be highly motivated and committed should and must have lots of vision, values, culture and personalization built into it. According to Vijaya Verma, Managing Director, Alopa Networks Private Limited, “It is very critical for a product-driven start-up like ours to build a policy with fundamental framework comprising things like everyone buying into the vision, clear communication of direction at all times, transparent environment that encourages feedback and inclusion as well as immediate incentive process that is personalized. And very often and I feel (preferably) all this comes from the CEO or head of the organization. While People are critical at all stages of the organization’s lifecycle the CEO’s involvement in HR policy and implementation is very critical at the beginning stage.” For example, Vijaya wants Alopa to be known as a company of best-in-class people with a shared vision, commitment and future. She wants to create a distinct Alopa brand of people management and organization building. And this can and should only be driven by the CEO.

 

Once the vision and values are in place you have two options of framing other aspects of the policy. The first one is to actually put everything in paper or documentation. The other is just to have a set of clear guidelines, the underlying philosophy behind the guidelines and allow the employees to apply it themselves. The first approach works best when you are starting as a large organization and most employees have not worked together and do not have much at stake in the venture. The second works out best when you start as a committed core team, which has a shred commitment and has a stake in the success of the company. Alopa and Ishoni at the time of starting took the second option and both aver that it has worked well for them and suited the needs and nature of the organization.

 

According to Satish, Managing Director, Ishoni Networks, “Having too much of HR policies and procedures hinders the speed with which the company can respond to market changes. Moreover we believe there could be no core team and employees and everyone is the core team both in theory and practice. Simply because that is the only way we can remain lean and still push new frontiers, believe it is possible and achieve it.” Lakshmikanth accepts the point but comes in from a totally different perspective. According to him one does not need clear cut HR policies right at the beginning as the people who join the core team most probably have known each other before and share a common vision and values. However as the organization grows in size, HR policies, procedures, manuals etc. become necessary to put on record the recruiting process, philosophy, performance measurement, recognition and promotion policy etc.This necessity springs from the fact that due to growth the promoter/core team members would not find the same time as before to spend with each new additonal employee and thus formalization is required. Interestingly he also observes that such policies do reassure a new recruit that he or she is being treated fairly and helps them know clearly what their rigths are.

 

Satish gives another clear don’t with regards to hiring at the start-up stage. He says, “It is better not to do desperate head-hunting and rather adopt an approach of taking only people who meet the requisite criteria and have the same wavelength. Because when you do desperate hunting often you end up compromising on your recruitment process thus recruiting someone with the wrong fit.” Such approach has strong underlying logic considering most organizations started small and even one wrong hiring decision will and does affect the internal equilibrium leading to friction and weakening of the commitment glue that holds the team together. In recruiting the consensus is not to do desperate recruiting as one wrong person could upset the equation in office.

 

One clear note of caution here. While it might seem that inducting people whom you know into the core team is a proven practice it does have its disadvantages. Taken a little further wherein competencies and roles are not matched or there is a misfit and still the hiring decision is made definitely does not work.

 

The next important aspect to getting the start-up people equation right is the work ethos, culture or environment as one might be inclined to call. According to Satish for a motivated and committed organization to be created it is imperative that the company management be made as invisible as possible. So the employees do not see a top down approach but a shared approach wherein cosensus decisions are taken. Vijaya Verma of Alopa lists transparency and empowerment as critical. She defines transparency as treating the employee as a stake-holder and keeping him posted on what is happening and where the company is heading. Under empowerment, each employee is given a specific role and responsibilities. After that how they play it out or undertake it is entirely left to their discretion.

 

Another important aspect of creating the most facile environment for innovation and commitment is prompt and fair recognition system. Both Vijaya Verma and Satish aver to the fact that their organizations have an instant and personalized recognition policy, which does not wait for one single day in every quarter to give away awards or incentives. Any achievement or exemplary effort is immediately recognized and substantially rewarded. For example, Vijaya says that the incentive amount given on the spot to employees at Alopa is many times multiple of the amount they used to get at Wipro. Plus it is personalized. During the rollout of the beta of their flagship product many had not gone home for days altogether and there was round the clockwork happening continuously for a few months. Though not a single person complained she made all of those who worked non-stop take a paid holiday at the company’s expense. This gesture was made on the spot and personally to everyone who was part of the team that worked on the beta.

 

Chandramohan, Managing Director of Bharatplanet.com takes that approach one step further and wants his employees to treat the office as a home away from home. So, there is piped music played to individual choices, pool table in the office and paid guesthouse with maid and cook for outstation employees. According to him the experiment has worked and he has seen productivity increasing multifold while attrition rates headed southwards.

 

What does this right environment translate into? Expedited problem solving, community feeling, and pro-active contribution. Instances to prove this – here are a few. In Alopa Networks, if a particular employee sees anyone struggling with a technical problem he takes it upon himself the initiative of findng a person within the organization with the knowledge to solve it and does it without any prodding or expectations. This particularly helps reassure newcomers that they have helping hands all around the organization making them feel comfortable right from day one. For pro-active contribution listen to this instance that happened at Ishoni Networks. An employee vanished from office for a few days without notice, developed a full-fledged resource management software for the company with no briefing and today the company uses the software effectively to optimize its resources. Imagine what such pro-activeness can take your organization if sustained?

 

While all this is fine, Lakshmikanth sounds a warning note with respect to fancy perks and over indulgence of employees by certain organizations at the start-up stage. He says such practices are counter-productive and fiscally harmful in the long-term. He highlights the fact that pioneers like Yahoo! and Amazon have always been frugal with employees perks and indulgence.

 

Another consensus recommendation that emerges out of all their inputs is that as a rule all of them did not hire senior, highly experienced HR professionals. Instead they preferred to do the overall direction and policy themselves with an executive to take care of the documentation and routine procedures/work. Chandramohan and Lakshmikanth strongly advocate the line that the CEO is the best HR head any start-up organization can have and good HR always flows from the top and should only be so at the beginning. As Chandramohan puts it, “We clearly categorized our HR needs and processes and decided I would personally head and supervise the function. This meant

 

all the employees had direct access to me, I personally knew what every employee was going through and was able to identify warning signals or bad performances quickly and rectify it.” Lakshmikanth adds that just having a senior HR professional as head does not make any difference or does it give an impression of an organization committed to HR. Plus he feels such senior professionals might not feel challenged by the job after some time leading to a disruption at best avoidable.

 

So, what is holding you? Go ahead and adopt some of these proven practices to get your people equation right, right at the beginning. Once you get this “P” right the other three (Performance, Productivity & Profits) would certainly follow in quick succession. It is just a matter of time.

 

(Compiled and written by the businessgyan editorial team. Queries regarding the article can be mailed to: peopleer@businessgyan.com)

 

Issue BG3 June01

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