Great Place to Work Institute Series - Companies should Walk-the-Talk
Moore's Law says that the rate of change of technology is getting faster and faster. Having the best people in technology can actually be a game changer
I do not think HR is really the responsibility of only the people function. It is the responsibility of every manager
Deep Kalra, Founder & CEO – MakeMyTrip.com shares his learnings on creating a workplace that can nurture people to enable them to grow with the organization in order to help the organization attain its competitive edge
1. What are the top 3 people related challenges that your industry is facing today? Which of these is the number one challenge? What are one or two innovative ways of responding to it?
The key challenge that we are facing now,and I would like to make it current, would be to build a robust pipeline of management. For us that is the number one challenge. We obviously have a lot of people who’ve been with us for some time now, and they are happy and well, but that proverbial second line of management is still missing.
There is a very strong team at the top, ie, the leadership team of 10 people comprising members from Human Resource, Technology, Product, Pure Technology, Automation, besides Sales, Finance & Marketing functions. So I would like to say we’ve got really good talent in the top team. We managed to get people from different organizations likePepsi & Amazon.Our product head comes from Google and I remember when we hired these people,we had trouble with these companies, asking us why we were hiring them. So we’ve built our top leadership team very consciously and we’re building on that year on year.
At the next level, while we have a lot of people, we do not have a ready pipeline. It is a question I often ask myself, “supposing the entire leadership team was on an off-site fora brain storming session and something were to happen to this team, what will happen to the company?” It’s a scary thought, since we are responsible to many other people like ourshareholders, stakeholders, customers and the market. We’re grooming the next level but that’s the number one challenge.
We are now very consciously inducting the right kind of people at the next leveland one of the fixes to it is, providing the right tools. We have beenworking on our TMS Talent Management System and it is really in-depth.We’ve engaged an external consultant and they have done Competency mapping formore than 100 managers and taken the 360 degree feedback of the top team.Basically it is a two pronged system. One part of it is related to the company and addresses questions, such as,‘which is the right place in the company for each of these people’, ‘what are their key strengths’, ‘in order to play to their strengths what kind of competencies can be worked upon and what the right inputs required for the same are.’ The tool also helps us to identify people who can improve and those who can’t. The other part of the system is for the employees, their own career development, the things they need for their own growth, perhaps an executive MBA, or maybe mentoring and coaching of a certain kind. The questions therefore are, ‘do the employees even know this and are we showing them this kind of a scorecard?’
This profiling of people in terms of their performance and potential index tells us about the competencies that are required in our business and in what measure they are there, currently. It’s an exhaustive exercise and we’re spending a lot of money but this is exactly to address this burning need. Therefore the approach is to do it for the employees and also do it for the company.
And what if there are some people who are at the end of the road in terms of their potential? One certainly doesn’t fire them, but one should be putting them in appropriate roles and should be telling them in a clear & transparent manner that they have reached their potential, so they shouldn’t have expectations of getting promoted every 3 or 4 years. Probably a Senior Managerialor AVP responsibility level is where they are going to stay.
On the other hand what one is excited about are the young stars, the future star potentials sitting there with tons of potential and who can grow and flourish. The approach is to give them all the inputs they need, treat them specially, treat them differently. I keep asking a lot of these questions, whether a certain person will ever make it to the Leadership Team. It is very clear that a few of them could. I would then want to give these potential stars the right exposure, rotate them across roles, send them forthe rightprograms, and buddy and mentor them in the right way, so that they also feel that they should not be leaving for something as silly as a little more money here and there. So therefore to reiterate, challenge number one is to build a strong pipeline of management and this is how we address it.
The next challenge would really be hiring the right kind of people. It is becoming more and more difficult, because jobs are becoming more and more specialized. Also, we are not in that funny space where we are no longer a startup nor are we a very mature company. When you are a startup you just hire some really bright people with a lot of enthusiasm.Their repertoire and learning agility is very wide, they can do almost anything.Right now,we are a young company. So there is a need to get the right balance.
Also I find this fuzzy quality in people who know how to get the job done. While hiring, weobviously hire for Aptitude and so we have a test that we use. The second thing is Attitude which one thinksone can gauge in interviews, but sometimes one gets it wrong. It is not easy to pick-up these team spirit points at times. If one is a great individual player and not a team player, that is a red flag because in this kind of a company one would fail miserably. In most businesses people have to be taken along. For example you have a great idea on online products and development has to build it for you. They’ll build it for you really fast and really well if you are able to excite them about it through influence. Why is it a great feature, how would it be a game-changer? An anti-thesis of this would be just giving development the specs and waiting for them to get back, instead of finding out why you have not heard back from them. It is like the charters that we are doing now; marketing will put their heart and soul into it, if they are excited about it. It all works in tandem, product development, and technology, marketing and contracting. In this case these are like the four wheels of automobile and are supposed to work together really well in order to get the formula 1 kind of performance. So therefore marketing for us is not a support function, it as important as the product. In this company there are only two classic support functions, Finance and HR. Not even Technology, it can make all the difference. Technology has done well for us, and it is pretty much the heartbeat behind what we do. So therefore, the challenge is getting people who have the fuzzy quality of going beyond their defined roles and getting the job done and not be confined to the water-tight compartments of their own role. That is a challenge everyone is facing and so are we.
We hire people with all the right kind of credentials, from ISB & IIMs, but it does not always work out. Maybe some of these people work in silos, and sometimes they have a chip on their shoulder, having come from these premier institutions. But that simply does not work at this workplace since we have some great people who do not have these degrees but are simply doing a great job. So they have to be told that they need to earn their stripes.
Retention has not been a major challenge for us, except in Technology, because in technology we compete for talent with the rest of the world. Some of our people are working with Google, Amazon,Yahoo etc. These are great organizations in the space of internet technology and who can pay well. Therefore to keep them interested is the challenge. The other function is marketing where there are lots of options in the internet marketing space.
2. What key trends do you see that will impact the way people are managed in organizations in future?
The fundamental change that has happened over a period of time and it is only going to get accentuated, is that all smart organizations have realized that people are their main asset. It is possible to get the best technology, but technology is fleeting. Moore’s law says that the rate of change of technology is getting faster and faster. Having the best people in technology can actually be a game changer. Therefore all companies are realizing that,the one thing that will keep them ahead is the quality of their people, and good people will always be in short supply and high demand and everyone will want them. Look at the some of the fast growing companies, for instance Google.Two really bright individuals from Stanford set up Google and hired some other bright people. The average IQ of the Google organization is very high. And now Facebook is now doing it. It is challenging many companies and people are spending much more time one Facebook. Therefore, all these companies are actually built by the power of idea. One needs to have a powerful idea, enunciate the idea, articulate it well, get really good technology and technology stack that will be scalable, and find ways to build it and keep innovating.
Therefore it all comes down to people. I think,among the Internet technology companies, where the rate of change is faster than most other companies, no company lasts at the top for more than a few years. There is always some other company that comes along challenges the one in the top spot. So now people are definitely being treatedas the most valuable asset, by these internet companies. At Makemytrip, it was always there in our DNA but one is going to see more and more focus on people, in the next 5 years.It may even be to the point of mollycoddling & pampering some of the top resources.
The other trend that is going to emerge is that organizations are going to be very open about treating different people, differently. It will no more be a hush-hush affair andcompanies would be quite unabashed about admitting that they have A players for whom the rules would be different, for the B players there would be good rules, for C players either they would move up or move out and the D players would be weeding out. I don’t think companies would have any other option. You can no more have a situation where everyone is treated in the same way. In fact there is a disadvantage in doing that. It is not just the cost but it results in the best players getting de-motivated. In a given team everyone knows who the D Players are, for eg. Within a technology team a D player would typically write very average codes, their work would be tardy, would never get delivered on time etc. Come promotion or appraisal time,in a classic socialist way,if everyone gets a 10% increment including the D player, then one would have actually done a great disservice to the A player. The A player would want to be in a place where he/she is appreciated and rewarded. Companies cannot be run in the socialistic pattern.Come promotion or appraisal time, everyone knows what each one has got. I am aiming towards a company where all these things can be on the intranet.
3. What would happen in your industry / organization if the people function ceases to exist? Please provide a couple of specific examples. Describe both short term and long term implications.
There are 2 ways of looking at this. Till 2005 we did not have a separate people function. We just had one manager doing hiring. Now we have a fairly good sized people function. But at the end of the day people management is also every manager’s job. So, technically nothing should happen, but practically a lot will happen because the due focus would not be there. For the business managers there will always be the pressure of meeting the numbers. Technically if one is a great manager, one is naturally a good people manager as well, doing HR for one’s unit. I would say more than half the members in our leadership team are excellent people managers. So every manager needs to have people management skills but one still needs the function, with numbers getting larger and things are getting sophisticated, things like Talent Management Systems, you surely need the HR function. I think taking off the entire function would have a huge impact in an organization like ours and others.
As your first constituent, all the depts. are like a loosely organized federation of states where each one is looking at its own issues, resources,constraints etc. Therefore who is looking at transnational issues? Classic metaphor would be rivers that cut across states and where there is conflict. Therefore who would look at development of individuals?
The vision becomes very short when all one looks at is the line of business. One is not looking at career development;one is not looking at growth of the individuals. If you don’t look at growth of those individuals it is going to bite you on your back because one year down the line after having met targets and doing well they are going to say, hang on!am I doing the same thing or just more of the same thing? Revenue would have moved up from 100 to 200 but the role would be the same. Therefore who would think about people’s roles enhancement and where in the organization would a person move next?Who would think about whether or not the organization is adding to the repertoire of skills of its people? I think that would be the biggest fall out. I would say that the cracks would start emerging in 6 months’ time. So hypothetically it is very interesting and one can perhaps hold it together for 6 months but after that the cracks would start showing.
4. What makes it so difficult for most organizations to become great workplaces?
The biggest problem is that organizations don’t walk the talk. People say a lot of things including founders and members of top management, but I don’t think they walk the talk. One of the things that is there at the back of every person’s mind is whether or notthis a place where at a fundamental level people are treated equitably, in an egalitarian manner, and I am not contradicting my ABCD theory here.The question is,are people treated as people and given the basic respect and the basic rights?This is always there somewhere in the mind and it impacts people atthe workplace. For instance, if you are a junior executive, does someone drive that into you every day,thatyou are just a junior executive? Say you get your mobike to work and you don’t get a parking place and you’re asked to go and park outside.Or it may be the case, where the company makes sure, that everyone who gets his vehicle to workgets a place to park. It may also be a company that provides transport, but in a searing 45 degrees heat, they provide a non-Ac, which to my mind,is almost inhuman. I know companies do that and they are also making money. One can cut corners elsewhere! If you are transporting your people, then spending a few extra bucks on providing an ACtransportation is well worth it.Also, the employee is not going to come completely exhausted in the heat of Delhi, but would come in fairly fresh. So one comes in and is raring to go. It impacts productivity and also how the person feels.
Not all companies are egalitarian to start with. They have different rules for different set of people. How you treat the people who are at the lowest hierarchical level within your staff, people who serve tea and coffee, often reflects a lot about the culture of the workplace. This is not something that you can tell people and hopefully this is something they learn at work, being within a certain culture, but if you hear something objectionable (eg. abusing the security guard), then there should be a clear message that it is not acceptable.
For instance, a company is going on an off-site. Do people travel differently or does everyone travel the same way, maybe a 3rd AC for everyone?Do people live in the same camps and tents or do they live differently?Though these are seemingly small things, they play a big role. As far as remuneration is concerned, you can always aim for something, based on the level of performance, however in all other situations,as a company we feel things should be the same for all employees. Like, we all have coffee from the same vending machine, same coffee room. I am not saying we are perfect, but we try to ensure that we are not making different rules for different people and becoming like the babus in the bureaucracy, because that will be the beginning of the end.
The other area is conflict resolution and appeal forums. I don’t think HR is really the responsibility of only the people function. It is the responsibility of every manager. I often say that if a person has a problem, it may be easy to say why the person didn’t go and talk to HRfor conflict resolutions, but the direct manager should actually be feeling bad that the person did not approach him. I tell my managers that unless the immediate managers themselves were the problem, in which case one can always do a skip level or go to HR, it is really sad that their direct reports don’t come to their immediate managers and instead go to HR. It is because either they do not have the confidence that you can solve the problem or you are not interested in solving the problem.
The HR team is there to give you inputs that you may not have, to give other support system that you need, to set up the system or set up the platform where people can flourish, but HR is not a substitute for a manager not being a good manager.
1. Please give an example of managing people which has been personally rewarding and meaningful for you.
Ithas mostly been around conflict resolution. We’ve had cases where very senior people have not been able to work together. It was just different ideologies, strong beliefs etc. I often see my role as that of an arbitrator. I ask people to ideally sort out the differences between themselves but if they can’t, then that’s what I am there for. I ask for a 3 way meeting to understand and hear out both points of views and there have been long meetings. These things have happened between marketing and business, between development and product, but when we walk out we are agreed. We’ve convinced one of the other parties and I’ve given my point of view and it is not hard to do.
The important part is that you have to be really dispassionate about it; and one of the simple things that I make people do is swap roles.
In case of conflict of priorities, we take out the priority projects and break them down into what’s more priority and what’s more impact. The next thing is to ask both parties to come prepared with their priority projects. Basically one has to invest time and one’s intent has to be very clear,that of solving the problem and finding the root cause of the problem. The 5 ‘why’formula works well, and most often, before one gets to the fifth ‘why’,one gets to the root cause of the problem.
To illustrate this is how it goes: Why has this not happened? - Because the people are not motivated.Why are the people not motivated? – Because the specs that have come from product are fuzzy, they are not very clear.Aha! So why are they not clear? Maybe they don’t know how to do spec writing. We then have to show them a model spec to demonstrate howto write a spec.One just cannot dump a lot of instructions and wait for something to come out of a toaster because it is not a toaster. For critical projects there can be a 10 mins stand-up meeting every morning and evening, where all hands in the project meet and discuss so that there are no gaps and there is continuous communication.We always try to foster the feeling that this is our project and therefore let’s deliver it together, which has really helped.
2. If you to hire the entire workforce with just one interview question, what would that be?
It is unfair to hire like that I think. (smiles). My typical opening questionis ‘what is the real reason that you want to join Makemytrip’ and related to that ‘what would be your contribution.Therefore why make my trip.’ I would really like a long answer for this because if I am allowed only one question then I am allowed a very long answer at least.Related to that and I would ask ‘assuming you are hired, what would be your contribution to the company, one or two years down the line’. People have been as blunt as saying wealth creation, but what I try doing here is really put the personinto the shoes and into the seat. Therefore, that would really be THE question, even if I am allowed just one question, which is really hard.
3. Mention the top 3 metrics that you track to keep any eye on your business health and the top 3 people related metrics that you track.
This is fairly straight forward and I guess we live for this. In business we track more than 3 metrics for sure, but the key ones for us now, after we went public, are revenue, rate of growth,ie.how we are growing in terms of transactions and bookings& some comparison with previous year same time, and last but not the least is profit and profitability which are both linked. Profitability is very important for us. If your profits went from five to ten percent and your revenues were more than double, then your profitability actually came down, which is a worrying sign. So profitability for us should keep going up, because inherent to our business is ‘operating leverage’ and this term basically means that as you grow bigger you get more & more profitable. That’s the business model and that is why the internet stocks are valued so high where the fixed costs are largely the same. Thereforewhen we move up from ten thousand bookings a day to twenty thousand bookings a day, our incremental cost is very small. So everything is gravy. Profitability and operating leverage therefore is our mantra. So if you want to have one big metric, it is ‘operating leverage’. That’s key for us.
On the people side, the traditional metrics are important, I think. One can’t run away from employee turnover as a retention metric. But one has to go beyond that metric to understand turnover by department, by level and for me that’s very important. We get a weekly report in respect of people who’ve joined us and who’ve left and for me it is key factor to know the rating of the person who has left. I get really bothered if we lose an A or a B player. So, if someone who is on a 3+ rating on a scale of 0-4 leaves, there is a problem. Therefore I don’t look at it as an absolute number. I always tell HR that I would like to know how many top performers we are losing. Otherwise, we are bound to have some attrition and that’s normal churn. I also like to know the reasons behind the good people leaving and they often tell you a pattern. So that’s the metric one has to really look at.We use an expensive head hunting firm, very selectively, for top level positions but they deliver. So cost of hiring is lesser of a concern.
4. List the various stake-holders viz. customers, share-holders, employees, vendors, society etc. in order of priority and explain the rationale for the same. What percentage of your time on an average would you spend on each of these stake-holders? Give an approximate break-up.
I have thought about this,many times before and I would go out on a limb and say ‘People’, before‘customers’. The customers won’t like me say that but I have a fundamental belief in this respect and Southwest Airlines really helped me in this; the famous book ‘Nuts’ by Kevin L. Freiberg & Jacquelyn A. Freiberg.
‘If you don’t have happy people how are you going to have happy customers?’ Southwest always said. This is true and you can see it on the face of employees.Why is Indigo Airlines in India doing so well? Because their employees are happy, by and large, and on the other hand we have Air India where it is hard of find a smiling employee these days. Let’s take a simpler case of McDonald’s. Maybe they have figured out a formula because they are working in an industry where conditions are tough and there is stress, however, those people have created an atmosphere which is buzzing and happening. The ultimate one that we don’t have in India is Starbucks. There is this book ‘How Starbucks Saved my Life’ and it is phenomenal. Every person in Starbucks has shares in the company and we at Makemytrip are aiming at that. It is something that I have been very passionate about. When I first mentioned it, people had lots of questions but soon everyone was convinced. We have announced it.There will be some guardrails like tenure & position, tenure if you are at an entry level position, because a lot of people will leave in the first year and for all senior positions it will be right from the day they join.
So, in an order of priority it will be People (employees), customers, share-holders. And yes society is an interesting one and we do our bit there. One of the most interesting things that we have been doing for a year now, is that when you book a flight ticket with Makemytrip, you get an option for off-setting your carbon credit.This means that the amount of carbon-dioxide that you are going to produce due to that flight, we give you an option to offset that. We have tied up with a Social Services Organization (NGO) calledSevaMandir which has got a large piece of land from the Govt. of Rajasthan to plant trees in the desert and by contributing as low as Rs. 25/- you can get a sapling planted. So let’s say you’ve flown down to a place and the carbon off-set for your part can be done by planting 3 saplings, you’ll have the option of getting Rs.75/- being added to your bill then and there and you’ll get an e-certificate for the same, and this thing gets completely audited. So through our customer contribution have got 300,000 trees which is phenomenal. We’ll soon have a forest there. So we do some more things, we support certain NGOs, we have an NGO budget. We don’t just donate, we also offer active participation, for instance there has been this NGO called Udayan Care, with whom we’ve been working for the last 10 yrs. First we didn’t have money so we used to go and teach, quite a few of us, but now we get the kids here.These are abandoned and orphaned children and we get children here, teach them, give them projects and its purely voluntary. We also run a voluntary donation programme where every month you can stipulate a certain amount being deducted from your salary, goes into your online account with Give India and the moment you have Rs. 1000 in your account, you can go online and move it to any charity of your choice and Give India audits all of those charities. We also run the marathon for one of the NGOs. So we are doing quite a bit, we have a small budget & whatever our people give, to top it up, we match it up as a company.
In terms of time commitment there would be several constituents. Business would be a large constituent. So if we have our pizza, sliced into business, employees, shareholders & society then I would say in terms of time commitment, share-holders would take up 20 percentsince the IPO was there and closer to the quarterly earnings and roadshows, society right now probably takes up 5 percent, business including customers would probably take up 50 percent and maybe employees/ team about 25 percent.
5. One thing that you have learnt over your career as a People Manager you wish you had always known at the beginning itself?
I started off more or less alone but as a part of the core founding team along-with my colleagues Keyur and Rajesh, it would have been awesome to have one technologist as a part of the founding team. I always knew it but did not realize what kind of heavy price we’ll pay by not having a technologist as a part of the core team. I truly believe that we have the best business person and the best finance person, but if we also had a technologist then our founding team would have been complete. It was not easy at a small scale to attract the top level guys in technology, whereas in travel it was easy because you were building a travel venture and so the person would be excited saying that I also want to build something exciting.Therefore in travel it was easy to attract. For finance it was dependent more on the personal belief of a person that the venture would be successful. In technology however, it was not easy to attract the best peoplebecause they would always be suspicious as to whether the new venture would work out or not, should they quit a nice &comfortable job in more established organizations, to join this crazy idea etc. The proposition was not compelling enough for technologists.
So to answer your question directly, what I have learnt later in life is to really play to people’s strengths. We’ve all got our quirks and idiosyncrasies and I’m sure I would not be the easiest person to work with. We’ve used the Leadership Impact Tool which shows that I am very particular about timelines&deadlines; not looking over the shoulder but just expecting everyone to maintain the same levels of commitment. However, now I have learnt to go beyond that, and as they say, ‘don’t sweat the small stuff, focus on the big stuff’ and give people the latitude on ‘how’ to do things. Let everybody do it in their individual style, of course within certain guardrails. Focus more on the substance and the big stuff. I wish I had come to that realization earlier and focused on strengths of people and played them to their strengths. I think I have spent a lot of time in the initial years of makemytrip trying to work on people’s weaknesses and trying to fix those. One has to realize that some of these things cannot be fixed, they are innate. And if they are innate then it is best to focus on the strengths.
6. Have your assumptions about managing people changed over time? Which ones? Why?
Earlier it was always the assumption that if a person is good here then let’s helps him improve on the weaker areas. But you can’t inherently change people andbeyond a point people don’t change. So you would have people who are typically lax or a little indisciplined about timings etc. but it is the quality of the work and the output that matters. You can keep trying to improve people or you can accept that perhaps this person likes to start late and end late and that’s ok. The strength of the person perhaps could be in being the most out of the box thinker, and most of these people are not very disciplined and they are not very particular,I have realized. So when you give them KRAs to set, it will be most difficult thing to get them to do and HR would keep chasing them and would have to sometimes shoot from my shoulders. So these people are not bothered about the mundane. One almost has to convince them as to why it is important to set KRAs or maybe get them all finished with the exercise on a Saturday. But they are typically in a world of their own. So actually it is a very rare breed to find, ‘the out of the box thinkers’. Thereforeit is best not to mess up their original style so much, that they lose the great quality of creativity.