Business Management – Dutch Uncles

Digital Marketing Automation: The Step-by-Step Approach

Abhilash Bapanasha — Tue, 17 Aug 2021 10:33:43 +0000

Digital Marketing Automation promises great outcomes; more leads, conversions and sales, all with less labour. Automation-using companies have seen their leads and sales grow, delivering sales productivity of 14% and market overhead reductions of 12%. Redirect Focus, Reallocate Budget, Support Customer Interactions and Gather Meaningful Analytics are some of the strategies to integrate digital marketing automation effortlessly into your marketing strategy. In order to address these, Mr. Ram Jalan was our speaker for MentorED, a weekly live 45-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity.

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I have always experienced that marketing is always considered as a cost centre. I think it is high time we consider marketing as a revenue centre, because your reason to exist is itself a cost.

Mr. Ram Jalan has seventeen years of experience as an entrepreneur, marketer, researcher and internet evangelist. He is Co-founder of DINTW, a Marketing Automation and Consumer Neuroscience Lead Digital Company; Executive Director of a hyper local news outfit Ten News; Angel Investor in a B2B Footwear ERP platform. He has served several brands like Emami, Reliance Industries, IMImobile-UK, AskMe-Malaysia, Batelco (Bahrain) and has successfully implemented Digital Transformation Projects at Askme, Wave Group and Omaxe.

In brief, the session had insights on the following:

Reactive Marketing, Database Marketing, Targeting and Segmentation, Trigger Based Marketing, Email Marketing, Social Media and Content, Lead Management, Sales Enablement and Business Intelligence

It is all about Customer and Consequences

“Fundamentals of any marketing or any customer outreach revolves around consumer and the consequences.” As Mr. Ram Jalan opined, digital marketing automation has gained momentum in the last several years now and the pandemic has further accelerated the process. A high usage of the internet, rather demanded by adversities brought by the pandemic during the last eighteen months has made it climb slots on the ladder. “There are internet first brands who have generated more than 2000 crore revenue.” Also, there is a paradigm shift Internet pure business with zero fixed costs coupled with low ownership and more subscription approach.

With many changes taking place, it is also a time for a transformation at the organisational front. Thereafter, he listed five different forms of customers and it needs to be streamlined in which category one’s target customers are located.

Thereafter, the mentor elucidated a typical marketing model framework. “I have always experienced that marketing is always considered as a cost centre. I think it is high time we consider marketing as a revenue centre, because your reason to exist is itself a cost. From day one, you are incurring a fixed cost. Therefore, marketing should be considered as a revenue investment.” He further talked about the different stages of marketing from the awareness stage where a brand introduces oneself to the prospective customer mainly registering their presence and offering a solution.

Engagement follows awareness wherein the prospect’s information has to be collected. But that appears difficult without selling a unique or emergency product. But again, to convert the prospect into a subscriber, social media outreach is the way. An advantage that social media automation offers is brand listening which is nothing but a means to know what prospects and customers think about.

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I always feel that insource and outsource is a great marriage, you should have the right combination of resources inside who are great managers, who can manage people, who can manage partners and run the campaign.

An integrative and consistent approach – Need of the hour

“You will find a common thing across all your marketing outreach strategies that your customer journey should be mapped, then your marketing to sales to customer service should be dating with each other. They should not be working in silos, they should be interacting and then only your marketing to sales to customer service handoff will be smooth, you must have a pricing strategy. Forget those days when we used to say that one size fits all, it does not happen for any e-commerce brand.” Thus, digital marketing has to be an integrated approach with each of the channels generating revenue in unison and not in isolation.

Consistency is vital too. “If you keep switching off and switching on your car frequently, you burn more fuel. It is better to hold on to a constant campaign or a digital marketing outreach rather than switching it on and off.”

Audience Asks

For me, marketing or promotion leads to better reach, But the number of sales is very insignificant. What should I do?

That is a problem that exists. See, I do not know the category of your business, whether it is B2C or B2B. But one thing is for sure, in B2B business, the sales cycle is long. Rather than assessing immediately what is the sales conversion, I think it is very important to assess how my prospect is engaging with the brand. Are the prospects opening your emails regularly? Are the prospects engaging with you on social media, all-in-one marketing plans help you gather that information about whether the person is visiting your website. So, look at those matrices, look at those data points, before you start, try to convert the prospect and that would also see and define your buying journey, the next set of sales.

Can OTT platforms help in reaching marketing goals? Isn’t it too expensive?

OTT is a great platform. I mean, with forty-five to fifty percent of the internet users active today. Going on an OTT platform, whether it is free or paid content, you definitely have your share of eyeballs coming there. I think it is a very good alternative to get pricing, which is very expensive. For a ten second slot, what you pay on OTT, is one tenth of what you pay on television, forget about the Primetime events like IPL, etc. But it is a great platform to start. It is not expensive at all, if you look at the ROI of language.

The mentor is hopeful of the arena as an effective means of client communication that is emerging with an upward thrust. He suggested, “A low resource or trying to impose all marketing activities on one individual or two individuals does not give you optimum performance. I always feel that insource and outsource is a great marriage, you should have the right combination of resources inside who are great managers, who can manage people, who can manage partners and run the campaign.”

Watch the complete video on YouTube to get the complete idea of how to actualise it in your business.

The post Digital Marketing Automation: The Step-by-Step Approach appeared first on Dutch Uncles.

What is KRA – Key Responsibility Area?

Roopali Kotwal — Wed, 02 Jun 2021 06:05:03 +0000

Imagine, you have a new recruit in your start-up business and he/she has spent just a couple of weeks in the new organisation. The new employee is unclear on the expectations you as an employer have from him/her. With no clarity on the goals and job responsibilities, you may envision the state of mind of the newly hired employee. The ambiguity may cause needless stress and result in demotivation and a feel of being directionless before the actual start of the journey. In such a scenario, clarity on the goals, better known as KRAs (Key Responsibility/Result Areas) shall bring stability of thoughts for the new employee. The KRA setting shall help to regain the confidence of the employee in the employer and validate his/her decision of joining the particular organisation. Thus, we can say that clarity on work/task responsibility will make provision to organise the work better for each and every employee.

KRAs: Definition

KRAs stands for ‘Key Result Areas’ or Key ‘Responsibility Areas.’ And, both these terms are used interchangeably. KRAs are the parameters that an organisation fixes/sets for a specific role. It defines the Job profile of the employee. Thus, providing a better clarity to employees as in what is expected from him or her in their respective role.

Who sets the KRAs?

An employee hires the employer as much as the employer hires the employee. This statement is very much true as having a role clarity is crucial for an employee as well as for the organisation the individual is employed in. The need for clear goals and expectations from the employee is not different in small than in large organisations. Even a small business or start-up will have a Sales, Finance, Human Resources and Information technology department and setting KRAs means setting goals or responsibility to each and every employee in these various areas/departments.
The Human Resources Management (HRM) takes the initiative of setting up a process around the ‘Key Result/Responsibility Areas. They share an initial outline with the respective department heads or managers who in-turn discuss and support the individuals in the team to set up the KRAs. KRAs in some organisations may also be known by a different name called ‘Objective Key Responsibilities’ i.e. the OKRs.

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Just like SMART Key Performance Indicators (KPIs), the Key Results/responsibility Areas (KRAs) or goals should also be SMART.

How do you define or write KRAs?

One size does not fit all! The saying is true for KRAs as well. Every company is unique and each role and reasonability will differ as the role demands. Being aware of the goals to achieve is very different from converting them into a written form. Just like SMART Key Performance Indicators (KPIs), the Key Results/Responsibility Areas (KRAs) or goals should also be SMART. Let us understand what SMART shall comprise of, in this context:

Specific: KRAs should be clearly stated as in what and how to do the job?

Measurable: Clarity on how the performance for a particular goal shall be measured.

Achievable: Ensure the set KRAs/goals are achievable, a discussion with the employee or manager shall take place.

Relevant: The selected KRA must be relevant to the job.

Time Bound: The KRAs to be achieved shall be time bound to attain the desired goal. Therefore, making the KRAs relevant and resulting in the improved productivity and efficiency of the employee.

Now, how to write them means following specific steps to document them effectively:

Step 1: Go through the Job description for a particular role or designation of an employee.

Step 2: In case, the job description for a particular employee is not updated, the Human Resources (HR) Personnel must discuss the same with the respective team managers.

Step 3: Figure out what the employee has to achieve. What is expected from the employee in that particular role?

Step 4: Based on the above stated points, list the critical functions and responsibilities in the Job role.

Step 5: Divide the responsibilities or functions into further two categories. For instance, what all can be measured either in numbers or in percentages? Also, what all cannot be measured in numbers or cannot be calculated?

Step 6: Based on the categorisation, the critical responsibilities or functions that can be measured in numbers or percentages shall be converted into the KRAs/goals.

Step 7: Write the self-explanatory definition of each goal or KRA.

Step 8: KRAs/goals can also be categorised into the various sections like customer, financial, business process, learning or growth.

Step 9: Define each KRA and ensure to mention a measurable target to be achieved and attach a realistic timeline to the defined KRA/goal.

Step 10: Review the set KRAs at regular intervals with the employee.

Please note it is important the employee and his/her manager are aligned with the decided KRAs before employees get a review on them for their performance.

What are the KRAs for Human Resources (HR)?

The KRAs of the HR department can be divided under various headings. Let us take a look at some of them in the below section:

Employee Relations, Training and Development: It is one of the primary roles and responsibilities of an HR personnel to train or facilitate the training and mentoring sessions for the employees in various departments on periodic intervals to improve their skill set with changing business requirements. Also, addressing any people management issues or concerns regarding any policies and culture code of the organisation.

Performance Management: Setting up simple and performance drive compensation strategies and policies. It is one of the primary goals of the HR team to ensure the performance of each and every employee is assessed as per the performance review cycle set in the organisation and its timely closure with the respective managers and the employees.

Financial Resources: The budget allocation of different activities and for different departments is handled by the HR team.

Strategic Goal: Driving strategic planning, Leadership Quality System and Employees’ Competences, Organisational Development and Increasing Technology and Information System.

Functional Goals: Customer Satisfaction, Communication (timely response, understanding and perceiving things correctly). Build friendly corporate culture and drive employee engagement. Also, creating an environment to recognise top talents and top performers in an organisation.

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Key Performance Indicator (KPI) indicates the performance whereas KRA indicates target value in a set timeline.

How are KRAs different from KPIs?

Just like KPIs, KRAs play an equal and an important role in an organisation. Key Performance Indicator (KPI) indicates the performance whereas KRA indicates target value in a set timeline.

An effective KPI is quantifiable i.e. it is expressed in numbers, aligned with the goal of an organisation. It indicates the performance with the time in number effectively, and confirms the direction of the movement towards the goal. KPIs are created at Organisational level and Departmental level. Organisational KPIs are created by the CEO or executive team and they reflect the goal achievement. Whereas Departmental KPIs are established by the Head of the departments or managers of concerned departments and they are aligned with the organisational KPIs. KPI depends on the KRA and measures it.

KRA means a set target that has to be achieved to a certain extent or percentage in a given or set time frame. For instance, the target is to increase the revenue of an organisation by 15 per cent by the end of 2021 can be understood by the below statements:

What: To increase the revenue
How Much: 15 per cent of the current value
Time Frame: by the end of 2021

All these factors combined together form the KRA.

Why are KRAs required?

Key Result Areas (KRAs) are critical for the success of any organisation. They are essential areas of business that require exceptional performance to obtain the desired result/outcome. KRAs set for a particular employee means the employee takes the complete ownership to complete the tasks basis which his/her performance shall be measured.

The employee should have a clear understanding of his/her role in an organisation. Thus, KRAs is a way to provide that clarity to an individual employee or a group of employees in the organisation and finally meet the key objectives and goals of the organisation.

Employee’s KRAs shall be aligned with the department’s objectives. Thus, finally aligning entire team’s or groups KRAs with the organisational objectives and that further need to be achieved as a part of the organisational goals. For instance, KRA for a team leader or business manager would be:

Managing day-to-day- operations/activities
Develop and implement a timeline to achieve targets
Motivate team to achieve departmental and organisational goals
Organise and conduct trainings relevant for the process/department to maximise potential of the employees
Delegate tasks to the team members as in when required

Conclusion: How do KRAs decide the success of an organisation?

Start-up entrepreneurs or small business owners must understand the importance of engaging and define clear and smart goals/KRAs for its newly hired employees. You would not like to imagine a state where the employees are disengaged or disinterred in their role before they actually start their journey. This would be detrimental for growth of both the employee and the employer. KRAs are important in any business or start-up because the clarity of Job role and responsibility will add productivity and performance of the hired employee in a defined time frame and it would not be a point of contention during the performance review of the employee.

KRAs are the major missions. They shall save a lot of time to revisit every-time one needs to know what all tasks have to be completed by the employee or team. Thus, with the structured and targeted approach, the employer shall keep the workforce motivated and focused to make the employee, the team, department and the entire organisation successful.

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Start-ups! What can you learn from Vijay Mallya?

Anju Nambiar — Sat, 13 Mar 2021 04:35:04 +0000

Vijay Mallya, once perceived as a true-blue Indian businessman, was celebrated with much fanfare. But his success story which took off spectacularly and was meant to be narrated and re-narrated for generations to come, quickly fizzled out and turned into an unpleasant, high-profile case that has left a bitter taste in everyone’s mouths.

Former owner of the Royal Challengers Bangalore Cricket Team, ‘The King of Good Times’ Vijay Mallya is the prime example of why everyone must run away from money lending financial institutions like the plague. If that sounds like a harsh take on bank loans, the whole country has seen the vortex which India’s very first ‘bad boy’ fell into and the vicious cycle in which he consciously entered and is still steeped too deep.

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When Liquor Baron Vijay Mallya took ownership of the company, the net turnover was INR 300 Cr.

The story of Kingfisher:

‘Kingfisher’ is a beer brand launched in 1978 as a subsidiary of the UB (United Breweries Holdings Limited (UBHL) group in Bengaluru. When Liquor Baron Vijay Mallya took ownership of the company, the net turnover was INR 300 Cr.

What did Vijay Mallya do right?

Was Vijay Mallya, India’s ‘Richard Branson’ a bad businessman? Did he not inherit entrepreneurship from his father and how did things turn sour for him?

To get answers to these questions, we need to look back in time before the infamous Kingfisher Airlines was born.

Mallya started off with a bang in the business world when he assumed the position of Chairman of the United Breweries Group in 1983, following in the footsteps of his late father Vittal Mallya, a renowned Indian businessman.

Everything worked out perfectly for Vijay Mallya at the start and it seemed like he was a worthy successor to his father’s legacy.

The company expanded under his leadership and in just the span of a year, achieved a turnover of 64%.

It also broke records touching 10 crores in beer case sales in the country which elevated the company to the position of being ‘India’s second largest spirits company’.

Liquor Baron to Fugitive – The events that unfolded:

Vijay Mallya’s interest in multiple businesses suddenly piqued and he was especially drawn towards the aviation sector.

He went on to launch an airline named after his very own beer brand. Both Vijay Mallya’s reputation as well as the name placement automatically elevated Kingfisher Airlines into being the second largest airline in India.

The glitz and glamour surrounding the launch of the airline and the excitement around the ‘Calendar Girls’ bolstered Mallya’s excitement to launch international flights.

To keep both domestic and International flights in the air, Mallya amassed a loan of 9000 crore INR from over 17 Indian banks, by using his political affiliations and by-passing all the laws that came in his way. This was the final straw which changed Mallya’s reputation and led to the downfall of his business.

Now every child in the country knows the story of the downfall of Vijay Mallya.

What’s in it for me?

Although the narrative around Vijay Mallya’s reputation abruptly changed to the extreme end, start-ups have much to learn from him. As a businessman, the irony is that he was indeed an incredibly good investor. A less known fact is that Mallya has invested in a good number of breweries abroad. Here, the lesson for start-ups is that they should be aware of the relevance of what they are investing in.

Vijay Mallya was a subject matter expert in his arena. His knowledge on investments came due to the empire which was left to him by his father. Out of all the business legacy families of India, the Mallya Empire had a particularly good mix of businesses and many products to showcase. Start-ups can learn from this about the importance of amassing knowledge on the right investments.

Vijay Mallya was a visionary, despite all that ensued. He had a keen eye about what was brewing at the time. Railways had become privatised and Foreign Direct Investment (FDI) had just come into the picture. With Foreign Direct Investment (FDI) seeping into railways, Mallya tapped into the white-collar sector’s need for luxury domestic travel. Start-ups can take a leaf out of his book to know how to keep a tab on the bubbling opportunities and swoop in when the time is ripe.

His deep understanding of the business growth as well it’s undershoots enabled him to bring competition into airlines. As soon as Kingfisher airlines took off, many others including Indigo and Air Deccan followed suit. Mallya was a true disruptor to aviation amidst much that was happening at the time. Start-ups inspired by everything Vijay Mallya did stand to gain much by inculcating a certain degree of disruption for any new venture.

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Right Time to Set Up an HR Department

Roopali Kotwal — Thu, 18 Feb 2021 10:35:04 +0000

Human Resource (HR) strategy is a part of business strategy. “Why” HR is an equally important concept as is “when” to set up the HR department? Let us just understand HR is a function and not a department.

Young entrepreneurs or small business owners can consider outsourcing the HR processes to an external firm as it is more cost-effective than to establish an in-house HR team or may consider recruiting a part-time HR professional as initial activities in a small enterprise are limited to hiring, onboarding, induction and managing the payroll. At the initial stage of the business, you can handle multiple roles including the one as HR as the budget is limited. For some time, you may enjoy this challenge. However, in long term, it would be a burden to handle so many roles simultaneously. Hence, you cannot overlook the importance of hiring full-time HR personnel and maintain it all stages of the business cycle.

Below factors shall help you to decide if you are ready to establish the HR function or HR department now:

Availability of budget to hire full-time HR personnel
Need for specialized inputs
Time consumption in the HR activities as compared to the presence required in carrying out operation activities to utilize the funds and build business
The business impact of not having an HR person
Delay in decision making due to unavailability of HR

Need for specialised personnel in HR Department:

Building the desired culture code in the organisation is very critical which is much simpler to implement in the beginning. So, ensure to make arrangements to have a right fit in HR once your operations hiring and other department hiring is done. HR is the torchbearer of company culture code, showing a way to the employees and keeping up the transparency, establishing a culture of equality no gender discrimination, integrity and fairness. As you have established your dream, you would want to know if you had the right vision and if you have met the expectation you set for yourself. A seasoned HR professional can take care of multiple activities more efficiently than any interim arrangement. HR personnel is required and will take care of the activities if chosen right:

Hiring/recruitment and selection process
Manage the payroll cycle and employee engagement
Compensation and benefits
Deep understanding of the employment laws (labour) and federal laws
Manage the compliances
Conduct employee satisfaction and feedback surveys
Handle employee grievance and will be a quick solution provider
Talent development (training and development)
Setting up a performance management system for evaluating consistent performance
Administrative tasks expert (employee leave, absence, absence files, the in- and outflow of employees etc.)
Policies as critical as sexual harassment and other travel policies and procedures
Arrange a manual or handbook to lay out the rules, regulations and expectations from employees
Direct point of contact for employees (employee relations as the fallout may happen due to increasing workload and diverted attention along with the increase in employee number)
Maintain employee records/files
Policy and procedure implementations

Now, HR will be an added cost to the organisation. However, at this point, the management must compare the stakes of not initiating to build the HR function. If you have enough budget and vision of how your HR Function should look like, you may want to carry out the search and hiring of the HR. You must follow your instinct and then, it may be the right time to start your search for the HR professional and set up of the HR department.

Consider the below points if you think you need an HR Department –

Business owners to track the time they’re spending on employee-related issues?
Are you up to date with the employment laws and compliance procedures?
Can you take the risk to get engaged in a legal battle if there is any slip up?
Can you engage yourself in the background check and feedback process etc.?
Is the focus shifted from general employees on necessary tasks into more specialized roles?
Are you able to contribute fairly and consistently on HR matters?
Have you been able to build a fair reward allocation and performance management system in place?
Are you missing on the important paperwork or any delay in updating the paperwork?

At that point, it makes sense to develop an HR department as well. Building efficiency and return on investment checks can help you to make up your mind on hiring the HR team.

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Building the desired culture code in the organisation is very critical which is much simpler to implement in the beginning. So, ensure to make arrangements to have a right fit in HR once your operations hiring and other department hiring is done.

Also, when the company employee strength reaches around 100 employees, it may be little difficult to address the HR-related concerns consistently. Even though you may have hired or outsourced the payroll process, the go-to-person shall be available for employees to contribute smoothly. The initial glitches when joining an organisation can make or break the situation. If the employee is comfortable and settled, then they are fearlessly focused on their main goal which may be an administration role, a software team role or project management role etc.

Having a vision of extending the business, can also make you think in categories and free the bandwidth of the business resource by adding a headcount in the HR team. Thus, as per industries growth rate, strategic planning and workload, you may have the presence of a dedicated HR personnel. Thus, saving you a lot of time because of the experience the HR specialist will bring. After all, “Time is Money.” Of course, the cash inflow has to be there to sustain the business and addition of any new member to the start-up team will be an additional cost.

Whom to hire in HR Department?

Now: Hiring the right HR person who is self-motivated and task-driven is very important. You would need to hire a person with strong knowledge of Human Resource Management, strong interpersonal skills, who isn’t terrified of working alone and is ready to explore alone on this journey as it will take some time to build the HR community, company culture and finding people to share the task.

An approachable and highly motivated HR personnel can only motivate the young taskforce joining the start-up. For instance, you are a part of a business group where you need a young mind with exposure in software and hardware building, you would get innovative people who do not restrict themselves and try out new things. Thus, bringing great ideas and freshness to the table.

You would need an experienced HR to lead and recruit fresh talent required within the team. A person high on integrity would be the right fit to create and maintain the culture code rather than keeping this important task of creating a culture for a later stage. It is non-negotiable if employees can’t abide by the culture code of the organisation. We need someone to lead by the example for the same.

The HR function is called the support function. It is the backbone of the organisation. It gives the organisation the flexibility of moving around the different functions and builds capability to change small enterprises into a big one. Of course, the team building can take time depending on the resources (cash inflow and revenue). However, a basic structure is required from day one and the role of the HR person and any other support function is taken care by the founder of the company until it is outsourced or full-time HR personnel is hired.

HR works at two levels – Strategic and transactional level. An HR person who is a strategic thinker is aware of employment or labour laws as one wrong step can create an opportunity to face the lawsuit or can engage the organisation in a legal battle with the complainant. HR department’s work is to give space to different functions to carry out the daily operation.

The risk associated with not hiring the HR Department

1. No checks on the incorrect documentation, disorganised record management, irregular attendance and other disciplined activities.
2. Not understanding the culture code.
3. Serious legal consequences if one step goes wrong.

HR is a link between the employer and the employee. Also, HR is a mediator who prevents any occurring issues in the workplace. Some companies survive without a proper HR department. However, creation of the HR function and handover of HR activities to the designated HR at an early stage will be much easier while the company is growing along with addition of workforce. Having an HR with a strategic approach can build capabilities, make the process effective and efficient.

Conclusion

HR function or HR department set up is a requirement in every organisation. Hence, the right time to hire HR personnel would depend on the actual business need and to support the employee and employer relationship by handling the issues arising during the life cycle of any employee in the organisation.

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Is Professional Employer Organisation (PEO) a Smart Investment for Start-up?

Chayanika Sen — Thu, 11 Feb 2021 10:35:02 +0000

Starting up a new business is no easy job! From building a team from the scratch to market your product or service -there’s a lot in the plate for a start-up owner. And then many of them fail too. So, what’s the solution? Some studies state that PEO increases the survival ratio by 28%

A report by IBM Institute for Business Value and Oxford Economics found that 90 per cent of Indian start-ups fail within the first five years. The main reason being lack of innovation. So, what is holding back businesses from innovation? Many studies and surveys have revealed that the top challenges faced by start-ups are the insufficiency of talent. Although there is no shortage of skilled talent in India, start-ups struggle to attract, hire, and retain the top talent in their initial years of operations.

While many start-ups fail because they can’t market their product or run out of money, the most common challenge of insufficiency of talent can be easily solved.

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A PEO or a professional employer organization offers comprehensive HR solutions like payroll benefits, tax administration, and other regulatory compliance assistance for businesses and start-ups.

What can start-ups do?

Apart from having realistic goals and understandings, start-ups need to have a thought-through strategy to recruit their key people. They need to have short term and long-term hiring strategy in place. Apart from having the right technical talent, start-ups also need to focus on soft skills and behavioural traits that they want to have in their candidate.

Understanding the right mix of talent and hiring them is a crucial factor for any start-up’s success. Unfortunately, many start-ups don’t realize how to cope with such dilemmas. In such scenarios, PEOs can plug in to bridge the gap.

Research conducted by NAPEO revealed that small and mid-sized start-ups and businesses could benefit by partnering with a PEO. Companies can expect higher growth rates, lower attrition rates, and an overall higher business survival rate, not to mention higher growth rate.

What is a PEO? Does my business need a PEO?

A PEO or a professional employer organization offers comprehensive HR solutions like payroll benefits, tax administration, and other regulatory compliance assistance for businesses and start-ups. It has been noted that companies that work with a PEO can grow 7 to 9 per cent faster with 10 to 14 per cent lower employee turnover rates. In case you are considering expansion across geographical boundaries, a PEO can help navigate the complexities of the processes like overseas hiring, adhering to compliance regulation of the land, managing payrolls, etc.

What can a PEO do for you?

It can offer a plethora of services like payroll, HR administration, risk and compliance management, employee benefits, training, compensation policies, etc.

HR administration

With a trusted PEO by your side, you can free yourself from managing all HR administrative tasks and outsource them to it. For example, employee recruitment and onboarding, regulatory compliance, workforce management, employee termination, and dispute assistance can all be managed by this organisation. From policy development to drafting an employee handbook, a PEO can help with all HR administration tasks, including behavioural assessments, employee termination, resolving disputes, conducting return-to-work programs, job description drafting, and so on.

Employee benefits

A good PEO company can help with employee benefits like health insurance, retirement plans, commuter plans, and similar other Fortune 500 employee benefits that is otherwise difficult for a start-up to offer. Such lucrative benefits definitely help to attract the top talents for the start-ups.

Employee training and development

PEOs can also help in shouldering the responsibilities for employee training and development.

Tax issues

The most significant benefit of having a PEO is PEOs are responsible for managing payroll and filing payroll tax returns. However, if there are any errors you need to bear the obligations as well since you will be in a co-employer agreement.

Risk and compliance

When you plan to expand your business internationally, you need to comply with the local laws and regulations. A PEO can help you stay up-to-date with laws and regulations through its risk and compliance measures. For example, it can help you comply with the safety training measures or workers’ compensations and so on.

Payroll processing

The PEO’s software comes in handy to keep track of the employee payroll information, workforce management, expense reports, paid time off, etc.

Benefits of using a PEO

PEOs save your time and energy by handling your employer’s responsibilities. But that’s not all that a PEO does for you. Apart from saving your time and headache, it saves cost, helps you adhere to HR-related compliance issues that can otherwise lead to fines, help you hire better and faster, and much more. Highlighted below are some of the key benefits of investing in a PEO.

Employee Benefits

As a co-employer, a PEO can offer a wide range of employee benefits to your employees. For example, through PEO sponsored benefit plans, it can offer vision and dental coverage as medical benefits, or a flexible medical expense spending account, life and disability benefits, and so on. The PEO’s role will be to enrol employees in these plans, negotiating insurance deals, etc.

Payroll

Working with a PEO can also help you save costs in payroll processing of your employees. It also helps to automate the payroll process without much hassle.

Pro tip: While hiring a PEO, look for one that has a simple, straightforward fee.

HR Compliance

HR laws and regulations are complex and dynamic. Do you know that non-adherence to these laws can lead you to hefty fines? At the same time, how familiar are you with the local HR laws of all countries/states/cities you operate in? Know that you need to comply with the local regulations even if you have one employee operating remotely from a particular country or a city. That’s why, HR compliance becomes a complex issue for organizations that are expanding businesses in new territories. Collaborating with a PEO comes in handy in such scenarios.

Recruitment

The biggest challenge of startups is hiring the ideal candidate in a fast turnaround time. This means there is not much time to build an employer brand to attract talent. Additionally, you need to spend a lot of time and money creating job ads, posting them, interviewing and screening, shortlisting candidates, background verifications, and finally retain them. A reputed PEO can offer recruitment assistance so that you can hire the right candidate in no time. An experienced recruiter knows how to read people for a specific role. For example, they can analyze tone in a phone interview, ask the right questions and assess the emotional intelligence to determine the candidate’s suitability for the job.

Minimize legal expenses

The biggest threat for any business operating overseas is facing legal lawsuits for noncompliance. So, keeping a tab on your employer liability is essential. Thankfully, PEO shares liabilities with employment-related claims and help in risk mitigation until you gather expertise in the area, which is one more reason to invest in a good PEO.

Investors love PEO

Investors love it when they see your business growing, and you need to expand your team. And when it comes to expanding your team, PEO is the first choice for entrepreneurs because there are multiple benefits under one umbrella. Starting from healthcare benefits, worker’s compensations, recruitment assistance to employment tax management, EPLI insurance, employment law compliance, and more. In short, a PEO is a one-stop solution for entrepreneurs who don’t have time to run the HR functions.

PEOs save money

PEOs help you save money, and investors love it when you go frugal with your business expenses. Saving money is one of the utmost priorities for start-ups, and PEO fits in well here.

PEOs help to hire the best

The biggest challenge faced by entrepreneurs is hiring the right talent, not to mention retaining them. What start-ups need are attractive benefits to attract, engage, and retain their top talents. PEOs can chip in here because they can offer precisely what candidates need that start-ups can’t afford to provide – benefits. When you have the right talent on board, the bottom line keeps growing, and a growing bottom line always keeps the investors happy.

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PEO is a great benefit to have as a start-up but it is also important to be aware of some of the barriers you might face while taking it on to make an informed decision.

Disadvantages of having a PEO

While PEO has many benefits, it is also essential to highlight some of the disadvantages of having a PEO.

1. As a co-employer, there will be relinquishing some control over your business.

2. The PEOs usually manage HR functions for different organizations, so your business might not have exclusive and in-depth attention.

3. Since you will be in a co-employer agreement, you need to burden equal responsibilities with the PEO if any dispute or issue arises.

4. Know that PEOs just support you in administrative and HR tasks and do not replaces your obligations.

What to look for when selecting the best PEO

It is evident from the above discussion that having a PEO has numerous benefits for a start-up. However, it is an important decision because you need to have a co-employment agreement with the PEO. Additionally, you need to find the right PEO service with operational existence in your industry and in countries where you are expanding. Here are some pointers to look out for when selecting a PEO.

1. Find a PEO that is trustworthy and reliable. To ensure, choose an IRS certified PEO.

2. Look for a PEO that offers scalable solutions so that you need not worry when you scale your operations.

3. Many PEOs offer self-onboarding and online benefits enrolment. This can save all the concerned stakeholders enough time and money. If you’re hiring a large number of candidates, this can be an effective solution.

4. Choose a PEO that offers attractive benefits for your targeted candidates.

5. If the PEO is partnering with any third-party vendor to offer a particular benefit, for example, dental insurance, ensure the vendor is registered in your state.

6. Look for PEO that offers specific benefits that can benefit your business. List down the services you want to have in your PEO, for example, HR services, employee benefits, etc.

7. It is always a good idea to look for a PEO that has an easy-to-navigate employee-facing interface.

The bottom line

A PEO can be a start-up’s best pal, helping you with all the support you need so that you can scale up your operational efficiencies. However, you must choose the right PEO that you’re working comfortably with because you will be co-employers with your PEO. If you have any doubts or questions, reach out to your PEO immediately. Ensure your employees are comfortable working with the PEO if you want to retain them in the long run.

The post Is Professional Employer Organisation (PEO) a Smart Investment for Start-up? appeared first on Dutch Uncles.

The IPO Essentials: Purpose and Performance

DU Desk — Sat, 06 Feb 2021 10:35:02 +0000

2020 was a great year for Initial Public Offering (IPO) debuts. It saw the likes of Mrs Bector, Burger King, Happiest Minds in the Indian stock markets leading to a great amount of confidence building in the Indian start-up scene. If the buzz in Silicon Valley is to be believed, then at least 10 Indian start-ups like Zomato, Delhivery, Policybazaar, Freshworks, Flipkart, Nykaa, BYJU’S, etc could go public in the next 2-3 years. For most start-ups, IPO seems to be their de facto objective.

The Indian government is in the process of easing overseas listing norms for domestic companies. India’s market regulator Securities and Exchange Board of India (SEBI) has also set up an Innovators Growth Platform (IGP), and has introduced a consultation paper seeking feedback for new rules. This step is likely to encourage more and more start-ups to head for IPO. And more the number of IPOs being issued, better the signs of the stock market and the economy doing well.

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The more number of IPOs being issued, is an indicator of stock market and the economy doing well.

What is an Initial Public Offering?

Simply put, an Initial Public Offering (IPO) is the first time that the stock of a private company is offered to the public for purchase. More often than not, IPOs are issued by smaller companies seeking more capital and grow further. IPO is considered a way for small companies to generate the capital required to expand. Sometimes, they are also done by larger private firms looking for trading publicly. Whether it’s in order to expand for an established company or a nascent company trying to generate more revenue, the bottom line is that companies seek an IPO to raise money.

At Bengaluru Tech Summit 2020, even Sequoia Capital India’s managing director Rajan Anandan is known to have called 2020 a big year for start-ups in India. The best form of exit for the promoters and investors in start-ups is through the IPO route as the stock market will test the strength of these companies, he said. “However, the goal of the start-up is to create an enduring company which is also very valuable and interesting.”

Typically, a firm launches an IPO when it reaches a stage where it’s difficult for it to expand using private capital.

The Process and the Purpose of Initial Public Offering

The process of an IPO known as “going public” in common parlance. Due to a lack of historical data on whether a company will perform well or not, investing in an IPO can be full of risk for an investor. However, it’s an opportunity to become shareholders in the company and earn dividends if the company profits for an investor.

There are two key purposes for launching an IPO. The first one is to raise capital and the second one is to boost prior investors. When a firm goes public, it gets access to a host of investments possible. And that is almost always way more capital than what firms can get through private shareholding or venture capitalists.

IPOs are generally known to have volatile opening day returns. This can attract investors looking to benefit from the discounts available. But it’s a different picture in the long term. Over the long-term, an IPO’s price settles into a steady value.

An IPO requires a certain process to be undertaken by the issuing company with the help of an underwriting firm. The first step is to determine the type of security to issue, what is the best offering price, the number of shares to be issued, and the right time to bring it to the market. There are other nuances to be kept in mind for each of these steps. For example, IPOs are often under-priced to ensure that the issue is fully subscribed/oversubscribed by the public investors. The investors of an IPO expect a rise in share prices on the offer day in case it is under-priced. It increases the demand for the issue.

There are a number of metrics for judging a successful IPO process and its performance. An IPO is considered to be successful if the company’s market capitalisation is equal to or greater than the market capitalisation of its competitors in the industry within 30 days of the initial public offering. If this doesn’t happen, then the performance of the IPO is in question. Another way to determine whether an IPO is successful is to look at its market price. An IPO is considered to be successful if the difference between the offering price and the market capitalisation of the issuing company 30 days after the IPO is less than 20%.

Companies planning to go for an IPO also need to look at the criteria for listing, its advantages and disadvantages beforehand. According to Bombay Stock Exchange, the start-up platform will facilitate the listing of companies in sectors such as IT, ITES, biotechnology and life science, 3D printing, space technology, ecommerce, hi-tech defence, drones, nano-technologies, artificial intelligence, big data, virtual reality, e-gaming, exoskeleton, robotics, holographic technology, genetic engineering, variable computers inside body computer technology, and any other hi-tech company. Here are some of the key advantages and disadvantages that can help you decide better:

Advantages of going public

There are a host of reasons behind a company’s decision to go public. It could range from the company getting cheaper access to capital to improving the credibility of the company.

Raising capital

A private company finances its operations through private funds from its shareholders, investors, venture capitalists, etc. But it needs a constant infusion of capital to keep growing and scaling up and only private funds aren’t always enough. Banks are an obvious first choice but that also comes with a limit cap. Then, the only other option is to go public and it goes a long way in ensuring that the company has enough funds to keep going.

Helps gauge the market worth of the company

Listing your company’s stick on the exchanges can help access its market worth. There’s a simple way how this happens. When a stock is listed, it is worth what an investor agrees to pay for it. If the company has a good market worth, it can attract better investment which can in turn provide better opportunity for future acquisitions and/or mergers. Hence, an IPO can provide a great insight into the company’s market worth.

Makes the company look more credible

When a company is listed on stock exchanges, one can be assured of the fact that there will be transparency of financial data and this helps increase the credibility of the firm in the eyes of the company. Regulatory body SEBI mandates that all listed companies must report all financial data in a periodical manner. It is often observed that the company that’s listed follows better management practices and its credibility tends to improve once it’s listed.

More business opportunities

The primary reason why a company decides to go public is to raise capital easily and quickly by having access to a larger number of investors. This cash can further be used to scale-up your business and push it further by making significant investments in research and development, human resource, infrastructure, marketing, etc. It is also a way for lesser known and relatively newer entities to form a good public image. It can also help growth-stage companies to attract a fresh pool of talent by offering them perks in the form of stock options.

Mergers and acquisitions become easier

And IPO and also help with mergers and acquisitions. Whenever, a publicly-traded company enters into a merger or an acquisition, say, with a smaller competitor, the terms and conditions of that deal usually include its shares as well. This helps in making the process of cash flow more effective, smooth and uncomplicated.

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The primary reason why a company decides to go public is to raise capital easily and quickly by having access to a larger number of investors.

Disadvantages of going public

Listing on stock exchanges is not a cakewalk. When a company decides to go public, it’s hardly a box of roses. There are a huge number of downsides as well.

Upfront costs

There is a huge amount of initial cost involved while launching an IPO. These include underwriting charges, registration fees, advertising costs, legal fees, accounting costs, etc. to name a few. There’s also an extra cost of manpower. The company needs a special resource that is an expert in the IPO process. This adds to the overall cost of launching an IPO which is already pretty high. Not just that, there’s a significant legal, accounting, and marketing cost that arise and are not one-time but an ongoing affair.

More compliance

One of the major drawbacks of turning into a public-listed company is that it is now required to follow certain standards mandated by a regulatory body and this increases its compliance requirements. Some of these compliance requirements include things like conducting audits regularly and publishing financial reports every quarter. This not only leads to increased auditing costs and hiring a specialised workforce but also ensures that all regulatory requirements are met and this process can prove cumbersome. There is also an increased risk of legal or regulatory issues, for example, private securities class action lawsuits.

Less autonomy

A fundamental difference between a private company and a publicly-listed company is control. The shareholders of a private company have more autonomous power and control over the operations of the business whereas, that control is lost as soon as the company goes public. Even if the majority shareholding is within the company, the minority shareholders can also influence a lot of decisions.

Counter-productive in the long-term

Why do investors buy shares of a company? The obvious answer is that they want it to perform well and make money off them. More often than not, this leads to them wanting a good return on investment keeping a short-term view of profit in mind. This can prove to be counter productive when it comes to the long-term view of the performance of the company. The company is forced to look at its short-term growth and if it fails to do so, then it could drive the stock prices down which may also impact overall sales and revenue.

Helps competition

While an IPO can let you be more transparent, it can also help your competition gain an insightful knowledge about your operations and finances. Since the company is mandated by a regulatory body to disclose information related to finances, taxation, accounting, etc., it may also sometimes end up revealing trade secrets and business methods that could help completion study your company and change their business plans accordingly.

Stock price of a company may or may not be reflective of its real financial results of the company. Hence, the fluctuation in the prices of a company’s share can prove to be a major distraction for the company and its shareholders. It is important to maintain that distinction by the management once the IPO goes through. In conclusion, there are many advantages and disadvantages of going for an IPO. It depends on the company’s long-term goal and vision of what it wants to go for. Whenever a company is going for an IPO, it’s management should realise that it’s not an easy investment of time and money. Generally, an IPO can take anywhere from 6-9 months and even longer. The management also needs to make sure that other areas of the business don’t suffer when it’s focussed on the IPO. The management also needs to be comfortable with the fact that shareholders gain a significant ownership stake in a company once a company goes public and they may also sometimes override decisions taken by the management.

An initial public offering can also be a significant exit opportunity for stakeholders, which can allow them to get cash in return. At the very least, they would be able to liquefy the capital that is tied up in the company. An IPO may or may not be the right trajectory for the company. It is imperative to measure all advantages and disadvantages before taking a final call on considering an IPO.

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Best Practices for Talent Building in a Young Company

Chayanika Sen — Mon, 25 Jan 2021 04:06:23 +0000

Scene 1

The CHRO in Akhil’s new start-up just put down his papers because he wanted to pursue a better career opportunity. Akhil has never thought something like this could happen. He is now in a soup. He has no idea how to hire for the role quickly when his business is at a critical juncture.

Scene 2

In Rita’s new venture, the CTO has put down her papers because she wanted to go on a career break. Rita has been smart and she understood the importance of building a talent pipeline. She has been making an active network of talents, and so she could immediately send out offers to suitable candidates in no time.

The above two scenarios briefly highlight why building a talent pipeline is essential in a young company. People are critical to any business growth. Companies that are proactive in their hiring approaches are always a step ahead of their competition who works on a reactive hiring method. However, it doesn’t end there with an active hiring strategy. Organizations and hiring managers need to continuously focus on nurturing their employees through different training methods to make their talents future-ready. This article will focus on some of the best practices for talent building in a young company

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You shouldn't be hiring to fill a gap in the company, but you should have a long-term vision - what skill sets you to want to have in your company so that your hiring strategy is aligned with the future goal strategy.

Why is talent building important?

Before we understand how to build a talent pipeline, let’s know why it is essential to make it.

Identify the right candidate: When your hiring is reactive, you often end up with a wrong hire because your focus is to fill the gap immediately. But when your hiring is proactive, you have a talent pool build-up already. You get more time to scrutinize their talent and understand if they would align with your organisational culture.

Higher retention rate: When candidates are not rushed in to fill in a vacant position, the prospective employees get to know your organization better and make an informed decision. When you hire the right candidate, the retention rate is much better, which improves the company’s bottom line.

Build your employer brand: When you build a talent pipeline, you are reaching out to prospective candidates proactively. This helps to make a strong employer brand. People know you as a trusted career partner, and when they look out for jobs, they will consider joining your organization.

Engage with passive candidates: Passive candidates are candidates who already have a job and are satisfied with it, so that they don’t look actively for a job change. If you want to hire the best talent, then you should engage with the passive candidates effectively. When it is the right time, offer them a role that is just right for them. If you want to build a talent pipeline for your company, you cannot ignore engaging with the passive candidates.

Improve diversity: Building a talent pipeline ensures that you have a diverse team across the organization where each employee is different from one another. Having a diverse team is essential to bring fresh and new perspectives to the organization.

Best practices for talent building in a young company

Determine the present need

If you’re a young organization, the first step is to identify and analyse critical roles. Once you identify them, work towards building the talent pipeline for the future.

What is your candidate persona?

A candidate persona is the ideal qualities that you want to see in your employees. For example, do you want your employees to be customer-friendly or aggressive? Do you want them to be good at working in teams with good leadership qualities? All these together make a candidate persona. Know your candidate persona and then work on your training methods and recruitment strategies to hire candidates who match your candidate persona closely.

Building the candidate persona

So, you know that it is essential to know your candidate persona to build the talent pipeline. But how do you know what would be the right candidate persona for your organization? The candidate persona should be based on data, research, survey, and data analysis and not on your assumption. Start by asking your existing employees – what they like about the organization, what they do not like, their career goals, and what aspires them to come to work every day. Compliment your findings by interviewing the hiring managers – what kind of candidates do they like to have in their team. Now combine the results, and you have your candidate persona.

Know the watering holes

Once you have your candidate persona, find out where they spend time online? Tap these channels to engage with your ideal candidates. A good idea is to explore how the existing candidates found out about your company. Which social media channel gets you the most traction?

Determine the future needs

As we mentioned, a proactive hiring strategy is not enough. You need to determine your future needs too. Where do you want to see your organization in the next five years? What resources you have, and how you want to nurture them to make your employees future-ready? Once you have analysed these questions, work towards developing suitable training methods to train your employees.

Best ways to fill the gap

While hiring external candidates is always an option; training your internal employees to fill the gap is a great way to nurture and engage employees. This way, you create internal job roles, put your employees on job rotations for better exposure, and fill up the gaps internally.

Build a pool of resources with internal candidates

Assign your internal employees to specific talent pools, develop them by encouraging them to go through different training methods, and get them ready for future leadership roles.

Build a pool of external resources

Work on your external talent pool simultaneously. Keep a database ready for external resources according to their skills, competencies, and talent profiles so that you can visit the database at a later date when the need arises.

Roles of managers in building a talent pipeline

Great managers are defined by critical attributes like leadership quality, being in charge, and excellent performance history. But they have another vital attribute that is often underrated: talent management. Great managers are visionary and can identify talents before anyone else does, transform them by nurturing their potential, and build a successful team’s future resources. However, it is easier said than done. Managers need to overcome their age-old hiring prejudice to become top talent agents. What managers need to focus on:

Think beyond. Think ahead.

You should be ‘playing like the ace cricketer Rahul Dravid when hiring your talent. Most managers hire prospective candidates to get their immediate job done. Remember, if you need to build a future talent pipeline, you need to think beyond and gauge if the candidate has the potential and skills to align with your long-term strategies. Not all candidates will stick around, so hire with your long-term focus in mind. Ask yourself your talent strategy for the next five years when asking your candidates where the candidates want to see themselves in the next five years.

Identify and focus on the right trait.

The World Economic Forum predicts that 65% of today’s jobs will be obsolete in the next 15 years. So, as a hiring manager, you cannot focus too much on experience, hard skills, and a candidate’s resume, although most hiring decisions are made on these factors. Hiring managers must focus more on learnability, emotional intelligence, drive, and soft skills that are fundamental to learning and acquiring new skills.

Take a data-driven approach.

Making a wrong decision is human nature, hiring managers are no different. Hence, your approach should be data-driven as much as possible. When you hire someone, set out definite performance matrices so that you can measure your hiring decision.

Be inclusive in your selection.

“The engine of progress is changing.” Hire people who are different from you, who challenge the status quo and bring a fresh perspective to the team. When you embrace people for their differences and not because they follow your suit, your hiring decision will be unbiased. As a result, you will be building a team that is diverse and inclusive.

Don’t just build. Manage your talent effectively.

As a hiring manager, your job doesn’t end with just hiring the right talent. You need to nurture them and manage them effectively too. Start with a solid recruitment strategy, hire the right talent, and work continuously to learn, train, and develop. Try out different training methods to see which works best for your organization. Take care of employee performance management, and finally work towards succession planning.

A Case Study: How Black Rock built a game-changing talent strategy post the 2008 recession.

BlackRock, the world’s largest asset management firm, rewrote the playbook in financial services when its peers were stumbling from the 2008 recession aftermath. What was interesting to observe was, BlackRock focused on delivering high performance. Four principles guide the firm’s 11,000+ employees.

Fiduciaries to its clients

Performance-driven

Innovative mindset

Be “One BlackRock.”

Among several strategies that BlackRock adopted, their game-changing talent strategy was something to take a note of. Putting the right talent in the right roles at the right time is one of the differentiators that worked for BlackRock.

If you have an innovative business model, you need to have the best talent building strategy to source top talents to the organizations. Here are some pointers to get you started:

Establishing a high-performance culture

Along with taking care of the employee engagement processes, the leaders at BlackRock focus on raising their performance standards. For example, high performing employees are identified, and high potential talents are promoted to maintain the high-performance culture.

Leadership behaviour prioritization

BlackRock protects and promotes its leaderships not just based on their performance and technical skills but also on how well they live by and promote the company’s four guiding principles. This standpoint of the company has helped BlackRock to drive a high-performance culture and build a team that stands as “One BlackRock.”

Developing employees

The leaders of BlackRock have long realized the need for different training methods to nurture and develop their employees. ‘Managing at BlackRock’ is one such program that enables managers to be more effective drivers or high performances, coaches, and delegators. As they climb up the corporate ladder, they can reap benefits from different programs like Influencing for Results, Enterprise Leadership, Driving Performance Through Teams, etc.

Regular talent reviews

Regular talent reviews ensure that performing employees are identified and promoted. This ensures the high-performance culture is maintained at all times within the organization.

Succession planning

The talent review process is a critical step in succession planning at BlackRock. Who moves to the next order in the hierarchy is wholly based on the results of talent reviews.

Be global, but be relevant locally

Finally, build your talent pipeline locally, even if you’re a global company. To grow and succeed as an organization, it is essential to identify, develop, engage, and retain talents locally. There is not much relevance to move expats in and out of their local countries in today’s world. Offer them leadership roles in their home countries, and they will soar high.

Over to You

To grow as a young company, it is essential to consider building your talent pipeline strategically. Hiring should align with your overall organization growth plan and not just as a stop-gap to fill crucial roles. Finally, employees should continuously be nurtured, engaged at work, and subject to various training methods to help you build a talent pipeline aligned with the overall organizational goal.

The post Best Practices for Talent Building in a Young Company appeared first on Dutch Uncles.

The 5 Ms of Management: Key Components of Every Business

Tanisha Achrekar — Mon, 25 Jan 2021 03:53:31 +0000

Cooking is an art and science at the same time. Even though two people are cooking the same dish with the same ingredients, the taste of both might be different. It is because the way the ingredients were used and the way the food was cooked has a personal individual touch to the dish. Management systems across organisations may function like that. Every organisation has access to a set of standard resources, the outcome of which depends upon how effectively they are managed. Management is the catalyst that plans, organises and directs all resources to achieve the company’s goal. It is the centre around which the factors of production revolve. The key factors of production that revolve around management are known as the 5 Ms of Management. They include – Manpower, Money, Materials, Machinery and Methods.

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If I have one skill as a manager, I can make things extremely clear.

- Ben Horowitz

The 5 Ms of Management

Manpower

Be it modern-day corporate high-rise or an ancient monument like the Taj Mahal, neither would be complete without the aid of manpower. To make the raw materials into a structure, an effective team of workers is needed. Similarly, an organisation can have the best of raw materials but without any manpower those fancy materials are useless.

Management is often referred to as the art of getting things done by people. Manpower is a vital component of any organisation as no other resource can function without it. Managerial and non-managerial people who are part of the organisation fall under this category. Having a qualified and competent workforce drives the success of any organisation.

A manager must ensure that his team is functioning smoothly by resolving conflicts promptly. Fair remuneration, work-life balance, sustainable working environment and adequate resources helps in gaining an employee’s loyalty in the long-run.

Money

Money is an all-purpose resource. A business needs capital to manufacture products or provide services. It is required for procuring raw materials, hiring staff, buying machines and the several other expenses that a business incurs. Availability of funds ensures smooth functioning of a business. A business requires adequate working capital and fixed capital.

Having inadequate capital can hamper the functioning of a business or in some worst cases, shut it down completely. Having enough money ensures that you can hire the best people, the finest quality raw materials and well-functioning machines. This, in turn, will ensure that your end-product or service meets the quality standards and offers value for money.

Several people quit their jobs when they are paid inadequately. Factories lose their orders if the machinery they have is outdated compared to its competitors. Lack of quality raw materials can cause a reduction in sales. For any start-up, it usually takes around two-three years to start making money. It is essential that a start-up has enough capital to cover all the expenses for at least two years.

Material

The materials are those products which are utilised for creating the final product. Materials can be raw or even semi-finished products that are used for making the end-product that the company sells. In cotton mills, cotton is considered as raw materials. Yarn or cloth sheets derived from these factories are then sent to the clothing factories. These sheets of cotton are viewed as raw materials in the clothing factory. The cotton is sewed, tailored and altered to make a desirable outfit. A final product for one factory can be the raw material for another.

Raw materials are the primary building blocks of any production process. The management has to ensure that the quality and quantity is enough to meet the demand. They also have to note the transportation and conversion expenses of these raw materials. Quality and inventory checks determine if the company has an adequate amount and desired quality of raw materials.

Raw materials can be direct or indirect. Direct raw materials are the ones that are a part of the finished product. While, indirect raw materials are those who were a part of the process but not directly included in the final product. The steel used for manufacturing kitchen units is an example of direct raw materials. While the oil used in machines from which the steel cabinets are made is considered as an indirect material.

Machines

Machines are used for converting raw materials into finished goods. There can be several machines involved in the production process depending on the products the company is selling.

Purchasing modern machines helps in improving the process of manufacturing. The upcoming technology in machines plays a key role in production. Having well-functioning machines leads to quick production and may offer a competitive advantage over others.

Method

The method, being a way of getting things done, definitely does revolve around management. Method is all about the time efficiency. There are several methods a manager can use to get the same thing done. Getting from point A to point B may have ten different routes, it is a challenge here for a manager to choose the best one. The best method usually is the one that is cost-efficient while meeting the quality standards.

Also, different methods require different time for the completion of the same tasks. Two managers can be given the same raw materials, machines, staff and budget but still, the result produced might be different. This is because every manager has his own way of getting things done.

For the smooth functioning of your business, you need to ensure that the best resources are hired or bought across all the 5 Ms of Management. These 5 Ms of Management are interlinked and dependent on each other. In order to make a business successful, all the five components are needed to be utilised to their maximum potential. That’s what a manager does.

Management does have its set of theories that back it up as a science but still, the execution varies from person-to-person which makes it an art as well. To ensure that the factors of production above are well-curated and established, management systems are set in place. These management systems monitor the entire process and conduct evaluations accordingly. To know more about it, read our article on the ‘Management Systems’.

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Lean Canvas: Map Out Those Brilliant Ideas

Tanisha Achrekar — Mon, 25 Jan 2021 03:48:19 +0000

An entrepreneur grinds every day facing new challenges and taking advantage of the opportunities. One of the biggest challenges he/she faces is having an idea out on papers. You cannot just say I have an idea as an entrepreneur you are answerable to a bunch of people mainly your employees and investors. You need a plan. However, mapping out your idea may take weeks and months. How can you map out your idea quickly and effectively? This is where Lean Canvas comes into the picture.

What are the Lean Canvas?

The Lean Canvas is a simplified one-page business plan. Ash Maurya created this method and it is an adaptation of the Business Canvas Model by Alexander Osterwalder. The Lean Canvas helps you to map out all the essential points of a business idea. It provides a structure to your ideas, making it more concrete. The Lean Canvas model was created for entrepreneurs to help them map out their ideas simply and clearly. It is a time-efficient model as it is the go-to one-page format for brainstorming business ideas.

Understanding the components of Lean Canvas

Lean Canvas has nine blocks that highlight the needs and requirements of a start-up. The blocks create a logical understanding of how an idea would look on paper. Read on to know exactly what the nine blocks are all about:

Problem

What are you bringing to the table? What problems of your customers are you planning to solve? In this block, write the customer issues you plan to address with your idea. Know the top three problems your customer is facing and make a note of it.

Customer Segments

You cannot solve your customers’ problems without knowing who your customers are in the first place. In the customer segment section, write down your target customers. The type of customers you are targeting will help you to think what problems they are probably facing.

Unique Value Proposition

What sets you apart from the rest of the competition? Your USP is your unique value proposition that you are offering to your customers. In this segment, you will write about what unique value your business has to offer. Especially, when they are competitors attempting to solve the same problem as you are. What makes your brand or product stand out? Write about that in this section.

‘‘

Everything begins with an idea.

- Earl Nightengale

Solution

After you have found your customer’s problems, look for what solutions do you have to offer. How do you plan to tackle the problems your customers are facing? You may not hit it at your first shot, but at least you have started brainstorming for solutions. One of the best ways to find the solution is by conducting research amongst your targeted customers. Give them surveys and questionnaires to know what they feel and then use those learnings while finding the solution.

Channels

Channels are the medium through which you are going to reach your customer segment. Here you need to brainstorm through what channels can you reach your targeted customers the most. Like if your customer segment is millennial, social media like Instagram, Twitter, and Facebook would be the way to go. Find out the channels used by your customer segment and reach them through it.

Revenue Streams

How is your business plan going to make money? This section addresses where the revenues will come from the plan. Talk about how you are going to price your product/service. Though you may feel as your business is just getting started you should lower the cost or even offer services for free like most start-ups. However, avoid only focusing on getting validated by your customers. Conduct research and work on a price point that will generate revenue and the customer’s will be willing to pay for as well.

Cost Structure

To get your product/service out there in the market, a number of costs are incurred. If you have a website, you need to consider how much building it will cost to get customers on your landing page. At every step of the business, there is a cost involved. To have a rough break-even point, estimated costs and potential revenue streams need to be calculated.

Key Metrics

The only way to know that you are on the right track is to evaluate your business using its key metrics from time-to-time. Every business has different key metrics to keep track of. If you run an e-commerce website, probably the traffic you are attracting would be one of the metrics you would monitor.

Unfair Advantage

As an entrepreneur, while filling the lean canvas, it might be challenging to come with an unfair advantage. What sets you apart from the rest of the competition? Having an unfair advantage helps in attracting investors attention. Your unfair advantage can be anything like your well-equipped team, a loyal customer base, fixed set of clients, insider information, or a cost-effective plan compared to the competitors. Your unfair advantage should be such that it cannot be bought with money or easily copied by a competitor.

How to create a Lean Canvas?

The whole purpose behind creating a Lean Canvas is to get your ideas on paper for you and others to see. It is an alternative to the traditional business plans that are time-consuming and may not offer insights that are often needed. When you are creating your Lean Canvas, you can do it alone or along with your business partner. Basically, take 20 minutes and jot down everything that is in your head in those nine boxes. Some people like to have their Lean Canvas on paper while others prefer to have a PDF version of it. To each its own here, whatever sails your boat.

There are also several tools available online to create your Lean Canvas with the utmost ease. Some entrepreneurs prefer taking a print of their Lean Canvas or writing it on paper and placing it in a place where they can see it every day.

What are the features and benefits of creating a lean canvas?

Lean Canvas being a quick way to formulate business ideas from a business model to a marketing campaign, it has several benefits. It acts as a visual guide and helps to communicate your idea more effectively.

Focused on the entrepreneur

The Lean Canvas model was crafted for entrepreneurs. It is a simple business model which proves to be of great value to any start-up business. It is focused completely on what an entrepreneur is thinking and revolves around him. It helps him/her gain a clear perspective of his/her idea before involving other people.

Saves time

A business idea can take days sometimes even weeks to get on paper. The time one business is preparing an idea, another business may be launched implementing it. Time is more valuable than anything in a business. The Lean Canvas model is time-efficient to bring your idea on papers. It will not take you more than 30 minutes to fill the blocks in your Lean Canvas. Making it one of the most time-efficient brainstorming models.

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The difficulty lies not so much in developing new ideas as in escaping old ones.

- John Maynard Keynes

Helps in mapping an entrepreneur’s mind

The Lean Canvas has been designed to promote clarity in an entrepreneur’s mind. It helps him/her in mapping out everything regarding the business idea that is in his/her mind. Also, the model is so simplified that it can be adopted for different niches, making it handier and more useful.

Has a solution-based approach

The first block of the Lean Canvas is a problem and eventually, the solution is followed. It has a simple approach where it compels a person to think about what problem is their business addressing? How are they going to solve it? The approach is problem-solving and solution-based at the same time. It helps a business to understand the ‘why’ behind their model.

Aids in finding a company’s USP

An entrepreneur thinks hard when he/she is filling the unfair advantage section of the Lean Canvas. Here he/she is compelled to think about the unique value proposition of his/her business model. Along with thinking about what will make him/her stand out, an entrepreneur is also forced to think of how his/her USP cannot be easily copied by any entrepreneur. Finding an edge over the competition that cannot be adopted easily is a game changer to any business.

Easy to understand

The Lean Canvas has nine sections that compel an entrepreneur to think intensely. Also, the boxes have a limited spacing allowing him/her to focus only on the key points of any section. It ensures that the entrepreneur is jotting down things to the point. The Lean Canvas is a crisp and clear model which is quite easy to understand. It helps an entrepreneur gain his own perspective on his idea before showing it to anyone else.

The Lean Canvas is one of several business models available. It’s a quick way to get those ideas out of your head and on to papers. Read our article on the ‘Business Model Canvas’ by Alexander Osterwalder to know about the business model that inspired the Lean Canvas.

The post Lean Canvas: Map Out Those Brilliant Ideas appeared first on Dutch Uncles.

Human Resources : A Vital Role In The Succession Planning Process

Roopali Kotwal — Mon, 25 Jan 2021 03:45:40 +0000

Passing the Baton in Human Resources

Imagine establishing an organisation with your sheer hard work and perseverance, nurturing an idea to realise its potential and transforming it into a live business prospect aiding to the growth of an individual, an organisation and every-one associated with it. Entrepreneurs generate employment for human resources – thousands of young minds with immense talent, as well as experienced professionals to exploit their maximum potential where they can visualise their growth and secure their future. Now, picture having no-one around, to lead or to follow! This is exactly why Human Resources are crucial for any organisation.

One would be staggered, thinking about how they are going to survive and for how long? This fear will indeed take over the sanity, due to the loss of purpose, and the ambiguity created will disrupt the ecosystem. One is sure to be demotivated in such a fragile environment. To quote from a personal experience, how the team was left disoriented by an announcement of their leader resigning and leaving the organisation on a sudden notice just around the annual review of their performance management process. That was a time to be worried about but, the management had a plan in place, of course, without which it would have been quite difficult for the team to cope up with the situation. And, there came in, ‘Succession Planning’, which we are going to explore in the next section.

Meaning of Succession Planning

What happens when a senior member in a significant position is no longer available? A business leader leaves unexpectedly, a board member or a CEO dies? How do we ensure the retention of the workforce and their motivation? How to keep the next generation prepared to step up in their roles? How do we make sure that business continues in such scenarios? The solution to the above situation is to plan for ‘succession.’ Be it a small enterprise, a family business or a large-scale company succession planning ensures that the business operation is buoyant. It is critical to secure the future of an organisation. It gives us a brief insight into why succession planning is required. But what is succession planning? Let us understand it in little detail here:

Succession planning is a long term, continuous, structured and confidential process. It is a talent management process that builds a pool of trained workers who are ready to fill in the key roles when leaders and key employees step down. Succession planning relies on talented workers ranging from entry-level to senior positions who get groomed for critical roles. We also know that not all employees can be identified as successors as there are just not that many strategic positions to fill. Subsequently, there would be some employees who would feel left out and under-appreciated. Hence, maintaining the confidentially of a succession plan is of utmost importance.

Importance of succession planning

As the senior management and board members are the main contributors in the formation of Successors, they must highlight the need for a succession plan. It is their responsibility to invest time and effort to ensure its significance is well communicated and understood within the organisation. However, the complete ownership/accountability to execute and implement the process in the most effective way lies with the Human Resources (HR) department. HR must work closely with the higher management, to work on the succession plan efficiently. Their role is to prepare the next generation of leaders to move up. Hence, HR must:

1. Find the right talent who fits the ethics and meets the business requirements.
2. Hire high-quality individuals/great talent for all key/critical positions.
3. Identify the right candidates in the existing employee strength and develop new leaders. Succession planning increases the readiness of experienced and capable employees who are prepared to undertake leadership roles as they become available. Hence, people development becomes crucial.
4. Once HR has identified potential leaders, it is their role to make the programs available to develop critical skills. Thus, the HR role in succession planning is to mobilize the talent, fill the gaps and reduce the loss of business continuity. Active job rotations help to cross-train the employees and keep them future-ready. HR needs to prepare individuals to meet future challenges.
5. Identify the organization’s top performers to analyse competencies and potential roles. HR should use the appropriate instruments to provide the most accurate measurements and avoid to overlook the potential.
6. Identify succession gaps and find interim leadership role candidate if they do not get a replacement and establish plans for the development of such professionals.
7. Ensure business-critical roles are identified based on business needs. They need to work with department heads to identify competencies and need experience for each of these roles.
8. Match the potential future job openings and build capability through mentoring, coaching and training of selected members to become the successor when the need arises. Thus, the need to focus on learning and development becomes significant.
9. Include a process to identify and capture critical knowledge. Succession planning tends to target leadership role but to consider the transitioning roles or retiring is equally important. Hence, taking the note of the processes the individual is responsible for, being aware of who is cross-trained and anticipating the obstacles is substantial to ensure critical knowledge does not “walk out the door.”
10. Evaluate and recommend appropriate compensation for fast-track performers to make sure they are well-rewarded for their performance.
11. Develop reporting mechanisms to inform/apprise leadership and the board of individual candidates’ progress.
12. Prioritise the succession planning process and should ensure it remains a top priority for other senior members too.
13. Challenge the leaders to find the diverse talent to be a successor.
Succession plan requires ongoing work from management, as well as from the prospective employees who agree to become successors. But, as employees move in and out of the company, training needs, schedules and potential successors change. It is the responsibility of the HR to ensure succession plans remain up to date.

As this is a very confidential process, it is very important to form a core committee of most reliable members who can help to identify the mission-critical roles (positions, if left vacant can pose a risk to the organisation), recognise the potential candidates to be the successors and agree on a shortlist of candidates without disclosing the discussion agenda at any point of time. The reason that the meeting needs to be confidential is that it’s risky to share openly about succession planning meetings. You may have a high potential employee in the discussion who could not be on the final successor list for one reason or another. It that employee knows about it, it may be discouraging and cause him or her to seek opportunity elsewhere.

The committee members should possess skills to energise others and shall be able to execute the succession process well along with the HR to deliver the desired results. Also, clear alignment of competency and values of the organisations is very important before we work on a succession plan as succession planning can be done in a no. of ways. The best practice model is competency ( behaviour needed to be successful in an organisation ) based model. An example of competency is “Critical Thinking.” Thus, we would need to hire people who are good critical thinkers to be successful.

We need to understand that shortlisted candidates will go through the leadership pipeline which means the potential employees go in the pipeline, they are developed, stretched, groomed and leaders come out from the other end ready to fill the critical positions. Hence, we can say that succession planning is very much a part of the “bigger umbrella” that is “Leadership Development Program.” Succession planning is a confidential and consultative requirement. It is a top to bottom approach. It is critical to know the business vision and strategy of the organisation to choose the right successors. Succession planning is a continuous process to ensure we have enough supply of strong and ready leaders to fill the leadership roles whenever they are open. This ongoing process of succession planning requires frequent revaluation to reflect changing business strategy, the external marketplace, talent development needs and emerging opportunities and threats. Performing this analysis, ideally on an annual basis, can help ensure your business is prepared to replace any leaders quickly in a framework that links up naturally with your existing HR operations.

The activity may seem unnecessary and a waste of time for companies because they have to plan and prepare ahead and preparing people for jobs when both jobs and people are changing all the time. It will be like a vicious circle. However, it is important to note that it is “business-critical” to fill in the senior positions/top roles. Thus, keeping the image of the company far from being fragile. All organisations (large or small) can benefit from the principles of identifying crucial job skills, knowledge. However, succession planning is extremely important in case of small business/enterprises as delay in setting up the succession plan process can endanger the survival of small companies. One of the big mistakes small business owners make is identifying their desired successor first and then working backwards to come up with the process that gets them the result they want. Instead, starting with the basics, linking succession planning with the broader human resources review of business goals. Having a vision for the company’s long-term future in mind while building the requirements. The succession planning, like everything else, should reflect the business goals before the personal preferences if you want your business to thrive after you’re gone. Without the ongoing succession plan, there are risks which companies may face. For instance, losing star performers, giving up the market advantage and incurring additional costs. HR teams can facilitate succession experience by helping leadership understand people’s strengths and potential. By having these imperative conversations with leadership early and often, we can secure the future of the company.

Conclusion

Thus, to conclude, we can say that HR plays an indispensable role in the implementation of succession planning than actually initiating or creating the same. Hiring right talent after the initial meetings of succession planning or building capability of existing one. Identifying people, training them by setting up yearly goals, cross-functional training or functional training if required in the critical roles is among the key responsibilities of the HR. It is the job of the HR to think about how the jobs are changing and what sort of leader the company may need next.

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