Finance: What Every HR Professional Must Know

Yesterday, I had a great session on the above mentioned topic during the NHRD meeting in Chennai. The speaker, V Ramesh, Sr Vice President & CFO, Carborundum Universal explained the relevance of many finance concepts that should be understood and leveraged by HR professionals. One such concept that has fascinated me a lot is 'Time value of money'. It's incredibly important for an HR professional to recognize and understand such a concept especially when the HR team is fixing a VRS scheme for it's associate. Well!!! VRS scheme is just one of the many instances when a concept like 'time value of money' becomes very important.

He also mentioned the need to develop HR metrics in 4 essential areas[taking the example of Genpact]:

1. Growth
2. Retention[attrition by tenure,level,location,business; early attrition %,cost per hire etc]
3.Employee Engagement[Survey Response Rate etc]
4. People Cost

I particularly loved the Q&A session the most. An expected question on why there is a kind of loggerhead between HR & Finance was raised. I was quite convinced with the answer when Mr Ramesh said that HR should build the case in a better and logical manner. A classic example is that of a few revered companies that pay higher salary to their employees when compared to other companies in the industry. Well!!! one of the reason for this possibility is that the HR team in such organizations helps the associates to create greater value for the business, which allows the finance team to pay better salary to all it's associates. This basically means that Finance and HR have to take co-ownership for fixing the pay package of it's associates with equal interest.

One of the example of HR helping the associates creating greater value for business is by setting up lazor sharp KRAs for the associates.

Another interesting question raised was on what are the parameters considered in a variable pay????

One of the important point to be kept in mind in such a context is that the variable pay should be fixed not on a relatively permanent basis but on the basis of what the business wants to achieve in that financial year.

Rancho's views on Human Resource Management...

I watched the bollywood movie '3 idiots' today. A truly fantastic experience.I especially loved the character of Rancho played by Aamir Khan. I could relate with the character. Rancho is a witty engineering student who is truly passionate about machines and applies his theoretical knowledge in as many real life opportunities as possible. He doesn't chase high paid placement offers or an American dream. He wants to pursue excellence alone. He is passionate about people especially his friends and can go to any extent to help them in the most dire situations. He is also an impractical optimist who turns impractical possibilities into practical realities.

No wonder, I am influenced and inspired by the character. So I am attempting to post Rancho's views on managing people if he was a real character with strong and sincere opinion on HR issues.

Here it goes:

1. Finding out your employee's true passion in the business is worth it. Set him free and have faith in him.

2. Ensure that your employees do not turn cynical and always try to preserve their goodness.

3. Be there for your employees in their good times as well as bad times.

4. Be a constant learner and strive towards contributing towards the future of your domain.

5. Know what is right for people first and then for business. That's the only way to be the best business partner.

6. Help to fulfill your employee's dream by empowering them and they would empower your business.

7. Know your self priorities but try to be as selfless as possible. HR is a tough domain because of this reason but it is beautiful because of the same reason too.

8. Be candid about your opinion on people and business. But try not hurting others' sentiments in the process. Be sensitive.

9. Put theory knowledge in practice wherever possible.

10. Be an impractical optimist. At times, it is the most practical thing in business.

11. Whenever in self doubt or problem, say to yourself 'All izzzzzzzzzzz welllll' ... It might not solve your problem but it would give you the courage to find the solution...

Marina Beach: 5 years after Tsunami....

It's five years since Tsunami struck in the Indian Coastline. It's also five years approximately since I came to Chennai. 26th December 2004 was a day of despair and immense pain. It was a day when nature showed it's ugly side.

We never searched for the answer as to why nature did so.

Maybe we were too consumed in the pain we got inflicted with.....
Maybe we were too busy with our prayers....

Today early morning I went for a jog in the Marina Beach. It appeared calm and pristine.

Did it appear the same way moments before Tsunami struck five years back?

Did one of the Tsunami victim feel the same way moments before Tsunami struck as I felt today morning?

Well!!! the pics above have been clicked by me this early morning.

HR lesson from Chetan Bhagat

Firstly, Merry Christmas!!!!!!

I was reading this article about Chetan Bhagat which appeared in Forbes India website. While reading it, I found a simple yet very powerful HR lesson.

Consider the following para from the article:
'When it came to taking a summer project, he didn’t want to do “anything hardcore.” There was a placement at Cadburys that no one else wanted, and he leapt at it: “Two months in Lonavala! Chocolates!” His project, to fix a wrapping machine that was supposed to do 250 chocolate lollipops a minute, but was only doing 75. He puzzled over it, but didn’t crack it. One night, he bumped into the foreman, a veteran of the place. Rather than go eat alone in the executive canteen, he went along with him to the worker’s canteen. They talked for three hours, about the man’s life, his children, his struggles. The next day, the wrapping machine was miraculously performing at full capacity. The foreman told him that he’d worked there ten years, he knew the machine inside-out. Until then, “No one heard me. You did. I had to make your project successful.”

It emphasizes on the power of 'listening'. I am sure all the HR guys have been advised to be great listeners at one point of their learning curve. We all recognize it's importance and respect it. However, I feel the above mentioned incident with Chetan Bhagat can be a good reminder to us if we are at the risk of forgetting this basic quality of being a great listener.

I am aware of a few friends working for extremely reputed firms who had to quit their company because the HR did not have enough time to listen to them.

In such a scenario, either we should improve the listening skills of such HR associates or hire a few more HR associates in case the company feels they are already blessed with great listening skills.

Bottom line : No compromise when it comes to knowing the pulse of your associates!!!!