f o r    m a n a g i n g    t o m o r r o w
NOVEMBER 5, 2006
 Cover Story
 BT Special
 Back of the Book

The Building Boom
Is an asset price bubble building up in the real estate market? Flats in posh Mumbai areas sell at the rate of Rs 50,000-70,000 a sq. ft. and housing plots in Gurgaon are going for Rs 1 lakh a sq. yard. This may sound like music to those who have been clinging on to their assets, it portends danger to buyers. The high real estate prices keep the majority out of the housing market and make the dream of owning a house more distant.

The Learning Curve
India's investment in education-as a percentage of GDP-is lower than not just of countries in the West but also some of the emerging economies, including China. The percentage of population in the relevant age group enrolled in higher education too is the lowest among countries with which it must compete. Clearly, there is a need to scale up substantially the physical infrastructure and attract better faculty by offering market wages.
More Net Specials
Business Today,  October 22, 2006
The Quadrants

What We Measure and Why

There are four quadrants that determine the company rankings.

Brainstorming: At Dr Reddy's Labs
Food for thought: At MindTree canteen

How do you break down a complex organisation into something measurable? With great thought. Three years ago when we changed our survey partner, we also used the opportunity to add greater rigour to our Best Companies to Work for in India survey. After much deliberation, BT and knowledge partner Mercer Human Resource Consulting came up with a methodology built around four quadrants (for a note on the methodology itself, see page 78). These relate to HR metrics, employee satisfaction, perceptions of key stakeholders, and HR processes and policies.

There were good reasons why, we felt, an employer had to be studied on multiple parameters rather than an isolated metric like employee satisfaction. Yes, happy employees are a good indicator of workplace reality, but they can never be the only measure. Eventually, all organisations aspire to create institutions that can outlive their people. And institutions are built on the back of solid systems and processes. Our HR metrics, for instance, consider quantitative indicators of people management. We start by looking at the number of employees (which indicates the complexity involved in people management; in fact, to participate in the survey, a company must have at least 200 white-collar employees), attrition rates, average career tenure, promotion rate (that is, total number of promotions as a percentage of the overall headcount), average time for promotion, and go up to things like HR budget and the actual spend as a percentage of total revenues, training budget and spend, and gender ratio. This quadrant carries a weightage of 15 per cent.

Our next quadrant is the most important one; it's about employee perception. The proof of the pudding, they say, is in the eating. So, in our survey, we seek feedback from randomly selected employees on several key issues. These are: leadership, HR processes, transparency, alignment with organisational direction, quality of work life, employee development, and the HR function in the organisation. Given that it has the biggest weightage of 35 per cent, it can make or break the fortunes of our survey participants. For example, this year, Bangalore-based it consulting firm, MindTree, has jumped to #2 from the bottom of the top 10 list last year. As our story on the company reveals, MindTree's relentless focus on fair play, integrity and communication leads a lot of its employees to believe that they work at the right place. That said, the findings from the employee feedback are startling. It seems few employees are happy with their compensation or the role their HR managers play in career counselling. As our columnist from Mercer, R. Sankar, says (see Managing Employee Expectations starting page 86), there's a whole lot that companies are yet to do in people management. For instance, at most Indian companies, line managers haven't yet been given-or taken, if you will-the responsibility of managing the careers of their team members.

Meeting of minds: At Satyam campus
Tech-savvy employees: At HSBC India

The third quadrant evaluates the robustness of HR processes and policies. What we look for in this quadrant is the maturity of a company's people processes and policies compared to the best in class practices across the world. There are five broad issues that we consider within this quadrant: HR philosophy and policies; recruitment, selection and induction; performance and career management; training and development; rewards and recognition; and culture and work-life balance. Each of these measures is designed to answer specific questions. Is the HR policy clearly articulated and supported by well-designed processes? How does a company manage manpower planning? How are performance appraisals done? Is there scope for a 360-degree feedback? How are careers planned and managed? And what sort of a compensation system does the company follow? These are becoming increasingly important issues for companies across sectors (anyone who thinks that only it can afford to, or should, do this is gravely mistaken.) Small wonder, this quadrant carries the second-highest weightage of 30 per cent.

Finally, we ask for the opinions of four important stakeholders in the job market: A company's new recruits, ex-employees, campuses, and search firms. How does this help? For one, it serves as some sort of a reality check; after all, we are not talking to employees who are already steeped in the company culture, but either aspirants or associates who provide a window into how a company is popularly perceived. This quadrant has a weightage of 20 per cent.

Our final scores and rankings, consider the overall scores of companies. But a smart HR manager would do well to look at her company's rank on each of the four quadrants. It will immediately identify areas where the organisation needs to pull up its socks. For example, our best company to work for this year, Infosys, isn't #1 in internal employee perception, but a distant #8 (are expectations of Infoscions greater than those of techies elsewhere?). Satyam, on the other hand, tops the list on this quadrant. Understandably, it's not easy for a company to keep all its employees happy all the time. But in a market where the war for talent only promises to get more bruising, employers will need to stay ahead of their employees' needs and expectations-even if you are the #1 employer.




Partners: BT-Mercer-TNS—The Best Companies To Work For In India