HR Solutions and Consultant

Strategic HR Consulting

Architecture For Growth

The Promoter Managing Director of a major Herbal Research and Products Company reached out to us initially in January 2012. The reason why they approached us has become a familiar story.

A second generation entrepreneur who inherited the business and had built it up from Rs 14 crores top line to approx. Rs 125 crores over a period 10 years. The business was profitable but managed in a traditional style. Very strong value system which was inherited from the first generation promoter. High personal loyalty and motivation to do the “right thing”.  To grow any further required organizational and cultural changes.

We started the engagement by first conducting a cultural and organizational diagnostic. The cultural audit showed a very clear preference for an achievement-oriented style and a very clear vote against a power oriented culture. Lets set aggressive targets and build a back end, which takes pride in achieving. Learn to accept failure. Allow experimentation and enjoy climbing a higher mountain. The leadership was professional and loyal but the processes, which they worked with either non-existent or underdeveloped. There was no business plan, budget, cash plan. Process for recruiting was quite evolved but once people came in, there was no performance management system or compensation philosophy, which was supporting the business. The organization was quite flat putting excessive pressure on the Managing Director and the structure was a little confusing in terms of reporting to the family members….and somewhere not quite coming together as an A Team taking responsibility for the business. Well-intentioned professionals, some of whom had spent over 15 years in the business but not aligned directionally.

We started off with a quick diagnostic and then did a one day workshop with the top 25 people outlining what we thought needed to be done and the process we would follow. We obtained a buy in, and then went about our job. I must say that one of the major facilitators was a virtually complete lack of resistance or any kind of politics. People at different levels seemed to be keen to learn and do what was good for the business.

  • We restructured the organization to reduce span of control and created a product supply organization (PSO) to support the growth plans of the business, and also created a marketing division to support the sales network. We played with the idea of creating an SBU structure but for the size of the organization convinced the promoter to conserve expertise through a functional structure. In any case the market facing roles were distinct with one being B2C and the other being B2B. However the back end was knit together. All structural changes were supported with detailed job descriptions.
  • We helped staff the new organization and helped to get on board a Head of HR, Head of PSO, Head of Finance, and to bring in expertise in marketing as well as FP&A.
  • We installed the balanced score card and assisted the company to deploy that down to the Manager level. Along with the initiative on FP&A this installed a strong business planning and review system.
  • We installed a new performance management system linked to the balanced scorecard.
  • We restructured the compensation system. Rationalized base pay and introduced a variable income plan linked to the financial performance of the business and the performance of the individual.
  • We installed a governance system. There is an Executive Leadership Team which meets once every month and discusses the business MIS and the balanced score card of each individual member.

About a year or so back, the culture of the organization began to change. Aggression in planning, transparency of targets and actual performance of individuals. Bottlenecks are easily identified and the pressure to re-skill and develop is clearly being felt. HR function has very clear targets which are agreed with the business which include manpower cost, recruiting lead-time, attrition and capability building. The leadership has begun to look higher and further. To increase the pace of change and their appetite is increasing. Their top line is kissing Rs 200 crores and their profitability has trebled. There is a great leadership team, who are aligned, capable and working to solve problems.

We continue to coach the Managing Director and Head HR and provide advisory and consulting support where required.

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Build a Quality Organization

The Promoter Chairman of this Company in Exports, SEZ and Construction got in touch with us initially in April 2011. There were more big ideas than actual performance and the Promoter had a huge vision and some very challenging benchmarks of the kind of Company he wanted to create.

None of his business ideas stopped under a few billion dollars and none of his benchmarks were less then the global best. All this while he sat in an old office and his team consisted of his son and a trusted accounts & finance person. His total turnover was approximately Rs 320 crores. What attracted us to him was the quality of his thinking and his huge appetite to take risks. He had the firm belief that if he surrounded himself with clever and capable people, the business would follow. He had very little respect for any of the organizations operating in the domain he operated in and wanted to reinvent leadership and management as much as he wanted to reinvent the way businesses in his area were conducted.

We started working with this Company in mid 2011. I think the Chairman hired us because he basically wanted a sounding board, and someone on his side who understood his business plan and his ideas and. …agreed with them. All too often he was surrounded by opinions, which wanted him to go the conventional way. Lets move slowly and build. Lets hire cheaper people who will do what we tell them to. If our competitor has done something, well that’s probably good reason not to do it. Ultimately his motto was

“don’t be in a hurry to decide from existing alternatives. First design and redo almost everything that exists and in the process produce something unique.”

What did we do for this Promoter Chairman, Maverick?

  • We redesigned his organization structure at the Group level and at the level of the two businesses.
  • For about three months we installed one of our Partners as a part time head HR to induct new people and start looking at the policy areas.
  • We then assisted him in bringing talent into the organization and creating his A Team. Initially the Group CEO, The Head HR, The Group CFO. The CFO of the real estate business, the CEO and the COO of the Real Estate business and the CEO of the Fashion Business.
  • We spent considerable time installing the new leadership and explaining to them what the culture of the organization was and what to expect. Their roles and how to iron out the interfaces.
  • Coaching the Chairman & The Managing Director of the Real Estate Business (Promoter Group) in how to understand and deal with the new professionals.
  • Suggested changes in HR processes and policies, particularly the performance management system, the salary review system and the variable income plan.
  • We spent considerable time discussing ides around a long-term incentive but ultimately abandoned that idea. An idea whose time had not come
  • After numerous conversations we concluded that the organization capability which we had/ were trying to build was (1) design, (2) brand & (3) supply chain. Even though the fashion business was a manufacturing business, it was not regarded as the core capability we were trying to build in the organization.
  • A lot of our time was spent with the Group Head HR. In backing him, coaching him and assisting him to take a non-conventional route to fit the non-conventional Promoter of the Group.

Ultimately there were significant signs of progress. The Fashion business improved in revenue and profitability benefitting under the guidance of the new leadership and the new governance system. The Real Estate business took off and the initial offerings in the market were highly innovative and much appreciated by Customer, Investors and potential investors. A solid management team got built. We continue to remain good friends but have ultimately performed ourselves out of an assignment. The Promoter has a solid team, some true thought leaders and people around the table who look a lot better compared to what we saw in mid 2011.

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SOS on Amazon River

This assignment really meandered. It was like going down the river deep in South America, not knowing where we would come out.

We started with a business development call to the Promoter CEO and the Head of HR of this Company operating in the telecom infrastructure space. Initially we spoke about competency systems, then we spoke about a wide variety of organization changes including structuring, competency models and content development facilitated by appointing and training 8-9 internal change agents who would in many areas front end the work. The business was in financial trouble and had a bunch of operational and strategic issues. There was a cash crunch, and there was a backlog of payments to employees and vendors and the interest cost as percentage of sales was pushing dangerous proportions as was employee cost as percentage of sales. In such an environment we did not think that appointing internal change agents and going on a binge of organization capability building was quite what the doctor ordered. So we suggested a diagnostic, which would cover the business as well as people issues and then move on to implementation support.

The diagnostic threw up a number of issues. Leadership was underutilized and in many cases not really adding value to the business. The investment / turnover ratios were quite adverse. They were digging a hole for themselves by making investments, using debt and then getting no revenue reward. There were no expenditure controls and the Head HR was doing a fire-fighting job well below his capability.

We assisted the CEO to build proper controls and restore an element of financial control over the business. The first financial benchmark was whether we were paying salaries on time. We cut back the HR Function and the Finance Function. Reduced these expenses and put admin overheads under a scanner. Helped them put together a new charter of accounts and reporting system. We helped them to re organize the operations, build accountability and functioned as coaches to the CEO & COO. (Promoter Group). Gradually these steps introduced an element of financial disciple into the Company. We helped them to consolidate the operations and knock out loss making areas. We helped them install a performance management system which puts considerable accountability on the leadership team.

Gradually the operations have become cash positive and sustainable. Salaries are on time and outstanding has reduced.

At this point we are discussing with a Promoters a whole new approach. To become their long term partners, with equity in the business, and assist them to build it from here onwards.

We shudder to think that if we had gone along with the Head HR and taken money for internal change agents training and capability building and competency models….we would probably have pushed them over the edge.

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