Ethical Culture can prevent frauds Economic frauds Economic Times 18th january 2011

8/7/2019 Ethical Culture can prevent frauds Economic frauds Economic Times 18th january 2011

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SECTOR: CONSTRUCTION

Heres what you wanted to knowbut were afraid to ask: How muchthe big guns of India Inc take home

PAY WATCH

Pump UpEmployee

Morale

A RESURGENT ECONOMY AND WAR FORtalent has increased attrition beyond the normallevel across sectors. While instances of massexodus are yet to take place, HR experts say its hightime that bosses take note to prevent such a crisis.Writankar Mukherjee spoke to a cross-section ofseasoned HR professionals on how bosses can takeguard and boost employee morale.

Make the office a learning groundResearch has shown people dont change jobs just formoney. It is the job profile and the ability to learn with-in a organisation which often becomes a deciding fac-tor. More so, in case of todays generation of profes-sionals who want to learn and move up the ladder fast.When bosses and organisations continuously help anemployee develop their capabilities, they will not quitas they have a sense of enrichment. Bosses should givecorrect feedback to employees on their performance,help them learn on the job and build their capabilities,says AkzoNobel Indias HR director Sangeeta Pandey.

Chart the employees growthHR experts say employees who know in advance theirgrowth plan within an organisation are much more motivat-ed. Even though youngsters tend to change jobs every twoyears, they do so for career growth. So, why not show em-ployees their future career growth within the current organ-isation, which highlights their potential salary and futurerole? says YV Verma, COO at LG Electronics India.

Reward and recogniseLike talent management should ideally be a year-roundphenomena for every employee-friendly company, soshould be reward and recognition. Giving a pat at the backat the right time is important. Such rewards or recognitionthen becomes a kind of psychic income. It sends the mes-sage that employees come before customers, says Max In-dia Group director (human capital) P Dwarkanath, a veter-an HR professional.

Make your company a dynamic oneThe best way to boost employee morale is by constantl yevolving their role and responsibilities. HR experts sayorganisations should be dynamic enough to offer thatchallenge to their employees. Top performers like newchallenge and tends to get bored doing the same thingfor a long time. Godrej Consumer Products VP (HR)Rahul Gama admits it is like walking on a tight ropewhen it comes to balancing a persons tenure in a roleand ensure he does not quit for delay in upward move-ment. Rotation of professionals in different roles is amust to ensure equitable growth of t he organisation andindividual, says Gama. Godrej tends to rotate an em-ployees role every three years.

Identify the employees sweet spotHR experts say bosses should identify an employeessweet spot, be it job security, faster growth, desire towork out of a particular location, or be part of a new

business, and try to nurture it. People work for them-selves and not for an employer. Each boss should knowthe eco-system of an employee well enough. And thengive him the ability to perform, which if he lives up tothen compensate him adequately and nurture his emo-tional and sentimental well-being. These should be theresponsibility of all bosses, says Ajit Isaac, HR analystand MD at Ikya Human Capital Solutions.

E SUDHIR REDDYChairman & Managing DirectorIVRCL Infrastructures & Projects

`18.2 croreTOTAL REMUNERATION

`

93.5 croreCOMPANY NET PROFIT

`2831.5 croreCOMPANY MARKET CAP

RUPEN PATELManaging DirectorPatel Engineering


`193.3 croreCOMPANY NET PROFIT


Ethical culture can prevent frauds

CAREER & BUSINESS LIFE * THE ECONOMIC TIMES MUMBAI TUESDAY 18 JANUARY 201110

AJIT GULABCHANDChairman & Managing DirectorHindustan Construction co




ABHIJIT RAJANChairman & Managing DirectorGammon India




TeamLease,Gujarat ink

MoU for varsity

Our BureauBANGALORE

STAFFING firm TeamLease Services on Monday signeda Memorandum of Understanding (MoU) with the Gu-

jarat government to set up a vocational education uni-versity in the state. Around 22 community collegeswould be rolled out by 2014, under this project.

To be built in phases, the university will offer two-year associate degree programmes in alliance with pos-sible employers. The programmes are targeted at thosewho want more than a diploma course, but cannot af-ford a traditional college degree. With a total invest-ment of Rs 30 crore, most of the learning will be viasatellite. Colleges in the more remote areas will have

between five and 19 class rooms, minimising cost on in-frastructure. The first phase will see the setting up of 10colleges over the following 18 months.

The community college model has been borrowedfrom the US, where not many can afford traditional de-grees, TeamLease chairman Manish Sabharwal said onMonday. The institutes tie-ups with companies will of-fer apprenticeships and jobs to vocationally-trained stu-dents once they graduate. TeamLease has 1,400 clients,including Reliance, Oracle, Bharti, SAP among others,and they could all be potential employers. Sabharwalsays Karnataka and Maharashtra are next on the anvil

for a similar project.Education sector specialist and partner at Ernst

&Young Amitabh Jhingan said: The success depends onthe acceptance these courses have in the industry and inother colleges. It remains to be seen if companies willpay more for vocationally-trained people than freshers.

The project will also target those who want to berained in specific skill sets to secure a seat in a degreecollege. The Gujrat state government has agreed to takeup the discussion of letting TeamLease University grantdegree certificates in their Assembly. Sabharwal saidthis should happen in the next 3-6 months time. A uni-versity can only give degrees once the s tate governmentsanctions it after discussing in the s tate assembly. Team-Lease in the meantime will go ahead with the infra-structural works.

Once we get the nod for degrees this would meanthat one can complete ones vocational training coursewith us, and go back to completing their college degree,instead of having to start a new course again, Sabhar-wal said.

Hasmukh Adhia, principal secretary for Educationwith the government of Gujarat said, in a statement,that youth unemployability is a bigger problem thanyouth unemployment in the state. Initially, the voca-tional training university would focus on courses like

accounting, IT-infrastructure management, mechanicalengineering and electronics (called mechatronics), be-fore branching out into other things later.

TeamLease will also convert its 225 vocational train-ing courses into community college module, though thetimeline for this has not been decided yet. Qualifica-tions for enrolling in any of the community colleges in-cludes a Class X or XII certificate, and the fees will beanywhere between Rs 15,000 and Rs 45,000 annually.

Devina SenguptaBANGALORE

ACQUIRING a company is nevereasy. Thats because it is neverfully possible to buy out the core

of the firm: Its people. In these days ofhigh attrition and a vibrant job market,companies involved in mergers and ac-quisitions have to tread lightly when itcomes to employees. They have to be re-assuring about jobs, and allay all fearsand concerns. Given this situation, HRdepartments are beginning to play amore significant role than ever before, inintegrating people during M&A.

The Igate acquisition of Patni last week isan example. It required the integration of25,000 people (16,000 from Patni and9,000 from iGate). Though it was not easytelling Patni staff their company had been

bought out, HR officials ensured they wereinformed about this well ahead even be-fore the external stakeholders. Within min-utes of the announcement, employees re-ceived mails from the CEO, Powerpointpresentations explaining the benefits of thedeal, and timelines for various activities.Discussion forums, Town Hall meetings andteleconferences were set up.

These will continue so that employeesin all geographical locations can get theirdoubts cleared, says Sunil Chitale, chiefstrategy and marketing officer at Patni.Even queries posted online anonymous-ly, will be answered. The two companieswill continue with their independent HRpolicies till they can figure out integration.In fact, Phaneesh Murthy, CEO of iGate,assured that retention packages would berolled out to select employees soon.

The success and failure [of an M&A]hinges on HR activities, says A Sudhakar,executive director (HR) for Dabur. Peopleintegration is a complex issue. For most HRpersonnel, work begins before the actualM&A, when a company is scouting for aprospective. A cultural fit is key; if not ad-dressed, this could lead to high attrition lat-er. Working out compensation structuresand roles, and the swapping of best prac-tices, follows. Sensitising employees on

both sides, the HR departments must makeit clear there is no loser. If the merger is

cross-cultural, employees need to bebriefed on the cultural norms of the partner.Post-acquisition, surveys need to be

conducted in the acquired company, andtraining provided to staff, for them to geta feel of their new environment. Rolechanges are crucial; the sudden removalof top management in an acquired firmleads to instability.

For Tata Sons, which acquired Tetley,Daewoo Motors, Natsteel and Corus,among others, it is more about getting asense of the acquired company. SatishPradhan, chief, Group Human Resources,says acquisitions have evolved from theinitial stage of looking at financial strate-gy, to looking at employees and answer-ing the question, what will we look likeand do we have the right mix of people?

A September 2010 study by Mercer, en-titled Asia on the Byside, of 155 senior ex-ecutives from Asia-based MNCs involvedin cross-border acquisitions, showed that35% of respondents identified humancapital integration as the most significantissue during an M&A. Only 23% identifiedfinancial reporting integration as signifi-cant, while 16% said lack of employee en-gagement and leadership/managementretention issues were uppermost for them.Len Gray, Asia Pacific business leader of theM&A business at Mercer, says: This hasmeant that the HR function has an increas-ingly important role to play, even duringthe due diligence stage of an M&A, to beable to assess the cultural fit of the transac-tion, particularly where the objective iscomplete integration of the acquired ormerged entity.

Wipro Technologies has made 21 acqui-

sitions till date starting with Spectra-mind in 2002 and Nerve Wire in 2003

and the role of HR in M&A has greatlyevolved. We have learnt from our earliermistakes, says Bhandari. Like the factthat employee retention is key during anacquisition. In 2005, Wipro formed aglobal workforce team to ensure a smoothtransition during acquisitions, where HRspecialists looked into the target (or ac-quired) companys best practices.

Bhandari says during later projects,they ensured an HR manager remainedwith the target firm for 3-6 months afterthe acquisition, to ensure a smooth inte-gration of policies. In earlier acquisi-tions, we made the mistake of trying todo everything at once, but now we pro-ceed step by step, adds Bhandari. Firstlooking at the cultural fit, then compen-sation details and, finally, implementa-tion of processes. At Wipro, employees ofthe acquired company have to gothrough assessment tests every fewmonths, to ensure they understand theparent company and its culture better.

When FMCG major Dabur acquiredBalsara in 2005, Sudhakar says hestopped recruitment at Dabur a fewmonths before the acquisition so that the575 Balsara employees could be accom-modated. Daburs acquisition of Fem

brought a different set of learnings. Thecompany had a sales team which neededto be incorporated into Dabur without be-ing integrated, since that would lead to aloss of jobs. We had learnt this from theBalsara acquisition, says Sudhakar. WhileDabur faced 20% attrition post the Balsaradeal, the attrition rate after Fem was 0.

Cultural integration is a concern evenwith smaller companies. When telecommanufacturing company Tejas Networksacquired Israel-based Ethos Networks,we got the Israeli side to travel to India,and explained to both sides the impor-tance of the acquisition, says Arnob Roy,president (engineering) at Tejas. Jointprojects and technology became bindingfactors for employees, who were encour-aged to speak to each other over phone,rather then email.

WED LOVE TO HEAR FROM YOU.REACH US AT [email protected]

Source: Latest annual reports

ACURSORYglance at most ofthe corporate frauds thathave swept through the

world over the past two yearsmakes it amply clear that almostall the frauds are perpetrated byrogue employees and notprofessional fraudsters. Even thelatest Citibank scam proves thishypothesis. Shivraj Puri was an in-sider at Citibank, so was SanjayGupta at the Hero Group.

Why do employees commitfrauds? Is it an overpoweringgreed for material gains or is it justthe thrill of beating the system? Afeeling of fulfillment leading to adesire to prove that one is smarterthan the system in place? Whatev-

er it might be, one thing is c lear.Employees commit frauds becausethey feel the process is weak andcan be beaten and moreimportantly, they feel that oncethey beat the process, they will beable to get away with it easily

because detection is next toimpossible. Otherwise, what

would explain Shivraj Purismassive gamble of Rs 400 crore?

Is having a strong processcontrol the only solution toemployee frauds? Its a fact that ifa determined insider wants to beata process, he will be able to.Despite all the controls, checksand balances, the hiring process,you will still have someone sneak-ing into your system who will tryto exploit the weaknesses forpersonal gains, says RahulMokashi, a senior manager with aBPO who deals with instances ofemployee indiscretions day in andday out. If what Rahul says iscorrect, then how doorganisations protect themselves?

Prevention of fraud is moreabout creating a culture, whichpromotes ethical and moral behav-iour. Every organisation has its

black swan event! You might delayit but cant avoid it. The questionis, how do you deal with it, saysRakesh Parekh, a banker, in aFacebook comment on my profile.

How you deal with such instancessets the tone for conduct ofemployees in the future. A weak orslow response that allows theculprits to get away scot-free, willonly make it worse for theorganisation. On the other hand,getting a reputation as a strong,no-nonsense employer will deterpeople from committing frauds.

Organisations need only do afew basic things to make sure theydo not get perceived as weaklingsin their response to frauds or evenattempts to defraud. A zerotolerance to frauds irrespective ofthe stature, seniority orperformance quotient of theemployee must be a no-

compromise item, says Mokashi.Training employees to be vigilant

about what goes around them inthe workplace is another aspect,which often gets neglected. Thiscoupled with an effective whistle

blower mechanism is an effectivecombat mechanism. How an organ-isation responds to a breach builds

credibility and culture. A hotlinewhere people can call in and anemail id where people can mail intheir concerns and suspicions is amust. Many organisations have apolicy of not responding toanonymous emails. This may not bethe best thing to do. Anonymousemails at times, may give youenough to raise your antennae andstart snooping around.

Just as in housing societies, resi-dents associations have worked

better and are more effective atmaintaining harmony, law and or-der, as compared to the police, inorganisations too, employees vig-ilance can prevent large-scalefrauds and process breaches.

If you have to prevent anotherShivraj Puri from happening inother organisations, empower,skill, rely on and facilitate your em-ployees to build a culture of highintegrity and professional conduct.

Ravi subramanian

Banker & author ofDevil in Pinstripes

CRUCIAL LINK: EASING THE TRANSITION

From working on the cultural fit to working out compensationstructures and roles, HR departments can make M&As click

HRPlaysKeyRoleIn Mergers

GA cultural fit between thecompanies is an integral issue thatneeds to be addressed. Employeeson both sides need to be coachedon cultural norms, food habits andeven festivals and socio-economicconditions of each other

GThe acquisition teamhas to address theconcerns ofemployees, especiallythe common fears likewill I still have myjob or what willhappen to me?

GHR must ensurethere is no drasticchange inmanagement,which may lead todisaffection amongemployees andsubsequent attrition

COMPENSATION STRUCTURESAND

CHANGED OR NEW ROLES OF EMPLOYEESHAVE TO BE WORKED OUT. THE BESTPRACTICES OF EACH COMPANY HAVETO BE BLENDED.

WALKING THETIGHTROPE

Post-acquisition,surveys need

to be conducted in the acquired

company,and training provided tostaff to adjust to the new situation.

Role changes are crucial too

TAKEOVER SALVE

!

SARFARAZ

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Ethical Culture can prevent frauds Economic frauds Economic Times 18th january 2011