A satellite view of the Human Resource Organisation

Recently, I was questioned about the role of Human Resources function, in a vibrant organisation. This blog relates a satellite view of a balanced human resource function.

The purpose of the HR function is to build an organisation, which delivers the Vision, through a culture based on a defined set of Values. The culture should be one desired by the system, including shareholders, BOD, management, employees and even related business parties.

The Values are chosen after consideration of the Vision, the preferences of the system, and applicability to ethics, morality and environment of the resident society.

HRs purpose is not to create the Vision, but to ensure the capability and culture which delivers it. Once the Values are set, the broad HR roles are:-

A) Recruitment of employees who fit within this Value system. If we ignore ‘the right fit’ and hire willy nilly, we will never deliver the desired culture nor the Vision. Open the gate only to suitable people. So, there has to be a defined profile to hire, which is strictly adhered to.

B) HR ensures employees are dealt with even-handedly. Compensation & Benefits should never be a reason, for an employees failure. This means compensation benchmarking to comparator companies and an agreement on a percentile versus the market. So, if we target mid quadrant, then the company will sit around 50 percentile of compensation levels. If it is the top quadrant, it will be 75 percentile. At 100 percentile, it would be the top payer in the comparator basket.

C) While ensuring day to day functionality through C&B, the strategic work of HR is in Talent & Organisational Development.

Annual evaluation
Developing talent
Developing the organisation
Employer branding

Annual Evaluation

If merit is the culture, then evaluation of employees performance becomes the crux. A fair, well orchestrated and deep rooted evaluation (at least on an annual basis) is an essential. A development plan for each employee will be a subset of this evaluation. Compensation, promotions and career building are the end result of this evaluation. The company Vision, Values and culture will sustain or fail on the back of this process.

Developing talent

The talent recruited is modelled to suit the company culture . HR builds their capacity to ensure delivery of employee potential. This includes initial orientation, creating a development plan (based on annual and a 360 degree evaluation); later, executing that development plan. Development could be on the job, through in-house training, counselling (mentoring) or outside training. Sometimes a short term work assignment could be another method of development.

High potential (HiPo) employees are a special breed and this career development route is popular. Employees assessed with high potential are developed on a fast track. They are visibly treated better. It does not go against the culture of merit, since HiPo are evaluated through a transparent system. Nevertheless, the jury is out on this HiPo system and time will tell if it is successful.

Developing the organisation

Organisational development is built around the tool of engagement. An evaluation tool could be an engagement index or an organisational health report. We gauge the health of the organisation, based on the criterion of values and culture implemented. Structures, level changes, shape of organisation and employee engagement activities are based on these reports. Through these actions the company develops its organisation to achieve its Vision.

Engagement activites are many fold. Sports events; birthday bashes; lunch talks; magazines; employees interactivity; town hall talks; homogenous privileges; management walking corridors for better engagement; an open door/communications policy.

In the end, both company and employee should benefit from this development. It is value addition to the organisation and the individual. Even if the individual moves on to another organisation, it adds value to society.

Employer branding

This is taking a leaf out of our brand knowledge in Marketing. Through HR strategy, positioning, its imagery and execution, we create a visible icon, which then represents the employers brand. It is recognised internally and also externally in industry, public and universities. It becomes the main driver of the encapsulation of our HR culture, strategy and the execution centres around this employer brand. Just as we create brands for consumers, so we create a brand for our people and the world of employment.

D) HR plays business partner for CEO. They are the culture and people pulse for the organisation. HR should be the first to feel any vibration, inform the organisation and take action accordingly. Therefore, be a shadow behind the CEO, stepping into the brain whenever required or appropriate.

E) HR being the owner of culture is also the owner of policies, history, and the purveyor of the company story. It establishes an appreciation and awards culture; institutionalises the history; and celebrates its heroes. Once you achieve this institutionalisation, a company would very rarely disappear. There is just too much foundation for that to happen.

F) Technology and its role is already like an extra skin of HR. A reasonable size organisation just has to use technology for efficiency and ensuring data capture. But it should not de-humanise the face of HR. In the coming decades, with huge digitalisation, cognitive artificial intelligence and 3D printers (robotics), I expect this to be the greatest challenge which HR will face. Maybe the greatest challenge which the human race will face.

* thanking Kanwer Anwer Saeed for his critique
** picture is from Dreamstime.com

The Tarang Moment

They show these types of moments in movies. Imagine a man sticking his axe into the ground and out shoots a jet stream of oil. The man is sitting on an oilfield and knows that he has arrived. This is his goldmine. And talking about gold, the famous moment in McKenna’s Gold when they enter the valley of gold. The walls, the floor and even the stream are lined with gold. McKenna, Blind Adam and the whole entourage had also arrived. They were looking at a life changing moment.

Sometime in August 2007, myself and many more Engro Foods people, had this same experience. Lifelong we would know this event as the Tarang Moment. It changed our lives.

In commercial parlance, when you launch a brand you are stepping somewhat into the unknown. If you have done it right, then a lot of research on consumer insights has been completed. The product has been tested in stress conditions and has passed. Its taste profile has been matched and tested with consumers. The packaging and name of the brand has been researched, designed and tested. Through research and our own portfolio strategy, we know the bulls eye positioning and the marketing (both media and activation) campaign has been concept tested and fits the positioning. The distribution strategy has been agreed and we know exactly where and at what price the brand will hit the shelves. Our stock levels have been worked out and the production forecast has matched those, so that there is little danger of shortages.

As they say, all the ducks are in a row, and we are ready for success. So then one wonders why, nine out of ten brand launches fail. Unfortunately, that is the history of the world, so very likely things could go wrong and the launch may not be successful. At best recall (I may have missed a small one here or there), I have lived this routine through forty three launches in my career and many of those brands are not around anymore.

So back to that Tarang Moment. We struggled to get approval from our Board of Directors to launch a tea whitener. It took three attempts. Their query was that a rival brand had failed to make it a success, so why would Engro Foods succeed? When it was finally approved, we were allowed to launch only in six towns. That really set our backs up, and it was considered a challenge to our professionalism. Research showed us that tea was the highest incidence of milk usage in Pakistan and it also showed that in those very homes where this tea was consumed, there was a great demand and connection to ‘filminess’ (the movie world). It was also researched that as yet, no right fit product – enhancing the taste of tea – was on the market. Hence the brand Tarang, portrayed a ‘filmi’ world which was enhanced by ‘Chai ka Sahi Jor’. In all my career, I cannot remember a clearer positioning, which was backed by product attributes and fitted its brand world. We felt we had hit the nail on the head.

The Tarang Moment arrived for each of us at different times. For me it arrived at 8.32 am on August 15, 2007 in R A Bazaar, Lahore. The brand had been launched, but media had not yet broken. I was on a market visit to see how we had distributed the brand. A ‘SEC C’ class store in R A Bazar was my first stop early in the morning. An old woman walked in to buy something. She saw our colourful pack on the shelves and asked the shopkeeper “Ay kya haey? Ay Taranga?”. He said ‘chai bananay kou’. The old lady bought it, nary any advertising, nary support, nary any awareness. Alhamdulillah! I knew we had hit gold. Two weeks later this was further confirmed. With advertising on TV and strong supporting activation, our capacity to supply the product had gone short. What we had expected to achieve in a years time, we got there in fifteen days with maybe five days of TV coverage. When a new filling machine arrived four months later, that also ran out of capacity within another fifteen days. The Tarang Moment may last all of us a lifetime. Its unique in my career and probably unique for all the team involved.

EFL’s Summer of 2006

The summer of 2006 was one of trial. Like the good and bad times indicated by the Quran, I had run into serious bits of difficulty that summer. On the one hand my fathers deteriorating health was well advanced and at work the worldly battle of commerce was reaching epic proportions.

To explain the above, one has to recount some history. We were working in Engro Foods at a very early stage of inception. I had joined the company when Sukkur factory was a hole in the ground. By March 2006, however, defying all odds, we had commissioned the factory in 8 months, collected enough milk for production, created the sales and distribution infrastructure and lastly found a name and launched a brand. All this was done on the back of a most driven bunch of people, who seemed to treat Engro Foods as their piece of the promised land. Precious and worth fighting for,

Olpers! Now what sort of name is that? Is that a milk? What does it mean? A red packaging in a blue/green industry; strange slim packaging and then those advertisements, they just did not show any dairy functionality. These were the barrage of criticism we faced in the first few months. We were firmly established as a challenger mentality brand and even some of my well wishers were looking doubtful.

To top it all, along came the launch of another new milk, with a catchy old jingle and a lot more money to spend in May 2006. They negated the innovation space we had created for Olpers, and were spending lots more money and operating in almost the same fashion, plus they were located slap in the middle of the milk shed, unlike us who were down south and far away.

Life was tough through late April and May. Our advertising funds were exhausted by now and the sales after the early days were bordering on 20k litres a day. This small sales was supporting a factory and other infrastructure. Worse still, raw milk prices had increased to the extent, that the low production and high costs meant that by June, we were facing negative contribution margins. For the uninitiated, this meant that for every litre of Olpers sold, our loss would increase. We were better off shutting the plant down, rather than selling. In short we were looking down a barrel of possible failure and like in all commercial enterprises, failures eventually find their source. Typically, it is the head or near it. So the reality was quite clear to me, I was standing near the edge of a precipice.

In that rather apocalyptic situation, a silver lining appeared on the horizon, when the two largest dairy players announced price increases in the trade. This meant we could now make a reasonable margin and at least reduce our losses, till we could somehow increase our sales. The Management Committee meeting to discuss what to do and when to increase our prices, was considered a foregone conclusion. It was just a question of when. Except that the oddest idea had lodged in my brain that particular day. It came on the back of a discussion with the Sales Director, who had wistfully mentioned that he would love to sell at lower prices for a couple of months, to get our volume going. When I mentioned this particular idea in the MC, quite predictably and justifiably, the ceiling blew away. But the more the discussion went on, the more I became convinced and later one or two of the other members too, that we needed to stay with the same price. When it was conveyed to our Chairman, he asked me if I knew what we were doing, because it was the oddest decision he had heard of; “that we were ready to sell at a contribution loss, rather than a margin”. To his credit, once convinced, he backed us to the hilt with the Board of Directors.

That decision of keeping Olpers price at negative margins, was the turning point in EFL. Next month in July we jumped to 130k litres a day sales and in August it went to 150k. By September when we finally took a price increase, we had grabbed significant share from our competitors. So much so, that in December 2006, not only did we deliver a much higher sales figure, but our bottom line performance versus plan was much better. By then we knew EFL had arrived, Alhamdulillah.

In the long years of my career, one cannot remember as crazy a move. Infact, I explain it to people, that had I been at a MNC, I would have probably been summarily removed from my position, but to EFLs credit, they allowed a totally left field decision to prevail and the risk paid off.