Straight from the heart!

5 February, 2013

Rewards and Recognition Trends

Focus Areas » Managing and Rewarding Performance »

Three big questions on total rewards

Feb 4th 2013

 

vikramIn order to formulate an effective total rewards strategy, companies need to have a structured approach. Answered below are three questions that need to be answered to create a competent and progressive rewards and recognition plan.

What are the categories of rewards and recognition?

Rewards & recognition programmes can be classified in multiple ways, largely depending on their target segments, structure and micro-objectives. Some of these are “time based recognition awards”, “instant gratification” oriented awards such as spot awards, job well done, smileys or stars, a pat on the back, etc, “functional excellence awards” for exceptional performance, and “engagement based” rewards for occasions such as birthdays etc.

Other common forms of R&R categories are “individual” or “team” based awards; rewards based on the target segments such as “employees”, “customers” or “channel partners” reward programmes and even as the name suggests: “monetary” and “non-monetary” R&R programmes.

What are the current trends and how much do companies invest in rewards and recognition in India?

Over the years, corporations in India have recognized the importance of reward, loyalty and incentive programmes, which directly impact revenue, retention, product adoption and overall health of a business. While airlines, banks and retail companies were early adopters in this category, reward programmes have been largely absent or simply ad hoc in many traditional blue-chips and SME’s. Consequently, such programmes are becoming more structured, gaining earmarked budgets and resources and increasingly being outsourced to experts.

Now, recognition is social. Our RewardsPLUS engine provides an intra-departmental social recognition platform, which allows employees and channel partners to see their counterparts being rewarded and personally congratulated, on a common online medium. Many technology companies, which have in-house reward programmes, are further integrating the social recognition element with specialized product catalog providers on the intranet, Internet and mobile applications.

What motivates employees in India and what are the prevalent strategies for R&R?

A large part of employee attrition is attributed to lack of recognition in workplace. Though many leaders pursue recognition strategies, there is still a high degree of dependency on the immediate manager to execute towards building such a culture. There is thereby emerging popularity for technology led social recognition programmes, which drive uniform and syndicated usage, eliminate “favoritism” and yield high excitement among the workforce. Recognition is as simple as saying ‘Thank you’ or as elaborate as a formal felicitation at a company event. Increasing number of enterprises now provide a “suite” of products, including company’s own branded merchandize, for their employees to redeem from their accumulated recognition points.

Vikramjit Singh Sahaye, Marketing and Operations Director, benefitsPLUS

As published in PeopleMatters

2 September, 2011

When Ransom Calls

Why pay tax on a critical business expense such as Ransom?

That’s right! In a landmark judgement by the High Court of MP, Ransom money was considered as a business expense allowable for a tax rabate!

One day Khemchand Motilal Jain, went to buy tendu leaves from the forest, which is raw material for his Beedi manufacturing unit. On the way, he got abducted by the dreaded Raju Bhatnagar’s gang and had to pay over half a million rupees as ransom for his freedom. Jain filed Rs. 5.50 lacs ransom as “General expenses” for seeking tax rebate under Section 37 of the Income Tax Act, 1961 while filing his IT returns which obviously raised quite a controversy.

Interestingly, there were conflicting opinions within members of the IT (Income tax) department and the matter was referred to the High Court of Madhya Pradesh. Amongst others, the high court validated following key points before allowing the tax rebate:-

a. It is NOT an illegal expense

Kidnapping for ransom is an offence u/s 364 A of the Indian Penal Code (IPC), however the payment of ransom to secure the release of a kidnapped person is not an offense or prohibited by law.

b. It WAS on grounds of Commercial expediency

Jain was a whole time director of the business and the amount was towards his release and expediency. The amount paid was towards avoiding harassment, in this case saving the life of the Director and resume business operations.

Such a judgement does restore faith in the Indian Judiciary system however, this has the potential to open flood gates to a whole lot of new issues. We know some tax payers could go to any limits to avoid paying money to the government. Perhaps a rise in misuse of the provision by staging false cases of kidnapping and other speed money arenas. Perhaps, paying a bribe can be challenged to be no different from paying Ransom and draws the same rebate. Perhaps, this becomes a new line of crime for some unemployed youth in the suburbs having a new “Business logic”. Maybe high profile criminals agree on wire transfers to foreign banks.

The question is:

Should the citizens be given tax benefits by the Government for the amounts paid in overcoming the lack of governance & peaceful existence ? What an Irony!

 
 
Disclaimer: The above article is based on my interpretation and personal views on the cases mentioned. It is not intended to be read as facts or contempt of any court’s ruling and merely for sharing a viewpoint.

27 May, 2010

BOOM, Apple beats Microsoft

History was being written yesterday … when by 4 p.m. NY time in NASDAQ Stock Market, Apple’s market value was at $222.1 billion, higher than Microsoft’s $219.2 billion. It’s also the second-largest U.S. stock by market value, behind oil company Exxon Mobil Corp., valued at $278.6 billion on the New York Stock Exchange.

A New World Order has arrived…

Apple Incorporation became the Most Valuable Technology company in the world, pipping Microsoft Corporation, which held the crown for very many years.

Culturally speaking, this is a strong indication that “Consumer tastes” have overtaken the “Business needs” as the leading force shaping technology.

Apple: A Stunning turnaround

Apple was on the verge of bankruptcy when Steve Jobs assumed  leadership in 1997. So much so, Michael Dell suggested that Apple should just shut shop and return the money to shareholders. Today, Dell is worth barely a tenth as much as the Mac maker. In the very same year, Apple accepted a $150 million investment from Microsoft in distress.

Steve transformed Apple from the maker of Macintosh personal computers into a trendsetter in consumer electronics with the release of  iPod music players in 2001 and made the popular Sony personal music instruments go virtually extinct. Then came the iPhone in 2007 which upset Nokia in a big way. The latest mega release of  the iPad tablet in April this year is again beating Apple’s own projections and sold more than 1 million tablets in the U.S. in the first 28 days after its April 3 debut which is interestingly, Double of their iPhone sales in its 1st month of  launch.

Microsoft: Betting big on the Cloud?

Both companies have comparable revenue, with Microsoft at $58.4 billion and Apple at $42.9 billion. But in their most recent fiscal years, Apple had net income of $5.7 billion, while Microsoft earned $14.6 billion. Microsoft still leads the race with nearly 9 out of every 10 new computers sold, whereas Apple’s Mac is less than 1. Microsoft has poured billions into its cell phone, online advertising and other new businesses that have yet to emerge as significant revenue streams.

The next battle for businesses, amongst Tech Titans is foreseen in the Clouds – and literally so. Microsoft’s banking big on Windows Azure and the launch of Office 2010 & Office Web Apps are paving the way as against the Google Apps engine. Cloud computing is projected to create over 300,000 jobs in India alone and provide the subcontinent another advantage for managing the world’s back office.

As for the users, Apple helped create “The best desktop computer”, “The best portable music device”,  “The best smart-phone and now also “The best tablet PC” and …. it’s not yet done with innovations !

24 March, 2010

The Great Firewall of China

What started as a hacking bid four months ago, ended as the biggest brawl in internet history this week, when Google routed its 140 million Chinese visitors from Google.cn to their “Uncensored” Hong Kong site.

Google officially claimed to have uncensored its “Search services” – web search, news and images. Yet, the retreat is only partial, as Google shall retain most of its existing operations including its research and development team, local sales force and continue to operate the online maps and music services.

Knowing that  Technically, it’s still very easy for the Chinese government to continue blocking Google’s services, Google conveyed that they are closely monitoring such activity and that such actions will directly impact Google’s remaining local employment in Mainland China.

Google announced its decision with carefully chosen words, balancing the sentiments of Chinese netizens on grounds of Google’s mission to free speech and yet avoid a possible Chinese government’s backlash on their local officials.

Contrary to popular belief, “Censorship” is NOT the prime reason for Google’s exit. After all, while entering the Chinese market in 2006, Google had themselves agreed to such compromising conditions, in their race for capturing an exploding internet population. The systematic and targeted hacking of Gmail accounts, theft of their source codes , accusations of spying on behalf of CIA, lack of intent in the actions of the government against such crimes and most importantly – a clear inclination of the government towards homegrown  players, over a prolonged period of time culminated to such a major decision.

So, how does this impact Google Inc. ?

  • Revenue:- Google’s $ 250 – $ 600 million revenue in China, is a fraction of their $ 24 billion global revenue. Google would’ve spent a bomb setting & running local operations anyways.
  • Market share:- Google’s share in the Chinese search market is just one third, with the local player – Baidu still holding the lion’s share at 58%. i.e. 140 million of the 400 million Chinese internet subscribers. Baidu and Bing will definitely see an upside with this development.
  • Immediate Impact:- Already, in the last three months, Google’s stock price has fallen by 1.5% as against Baidu’s rise of 15%.

  • Opportunity loss:- Some analysts’ feel the opportunity loss for Google in the next 5 years is estimated to be about $ 400 million revenue income from China, which is quite insignificant   against their overall global plans. Their may be a blip in Google’s Android handset launch in one of   the fastest growing telecom markets in the world.
  • Chinese User behavior:- Unlike trends in many “Free” internet markets, the Chinese internet users are basically NOT searching for information but Lifestyle. Gaming, Social networking, shopping, music & entertainment are the real drivers that constitute China’s $ 11 billion annual internet revenue income (2009).

Thanks to Baidu‘s strength in China, they stand in the 3rd place in worldwide internet search with 7% share, only after Google (67%) and neck to neck with Yahoo (8%). Microsoft sites are at a distant 4th position with 3% share (which is now gaining traction with Bing).

Google’s decision to quit China understandably affect Google’s shareholder’s, as one can easily feel jittery leaving out the most populous country in the world. However, Google’s fundamentals are strong. The Google success story was never about China. With the recent global economic turmoil, Google has just about scratched the surface of the immense potential advertising revenue it can get when company’s migrate from traditional to digital means of advertising in rest of the world. Also, Google has only done a “Partial” retreat. Their plans for Android, etc. in China are yet unchanged.

The impact on China & their strategy?

  • Credibility & Sovereignty: China’s stance on the topic is very clear. To preserve their culture and control on public information, all media in China (by law) is censored by the government and Google is no exception. After all, how would the US react if one fine day Yahoo Corporation were to stand up and say they did’nt care about US cyber laws? The problem is that China goes to any extent in meeting such objectives, which includes but does not limit to the use of force, stealth & mercenary tactics even. They are also highly nationalistic while dealing with foreign players in their country (Especially US corporations).
  • Internet & mobile user base:- China has a 28.9% internet penetration with a whopping 400 million subscribers. A large quantum of these (140 million) are Google users. ‘China Mobile Ltd. – the world’s biggest phone company by subscribers, with 527 million accounts, also uses Google for mobile search and maps.
  • Local players & their impact:- Tencent (Instant messaging), Alibaba (B2B trade), Taobao (Ecommerce) & Baidu (local search) are already leading business players. With Google’s departure, Baidu will grow stronger in internet search. As Youtube exits, Youku and Tudou will gain advantage… But, without global competitors, they will never become World class.
  • Local Entrepreneurs:- Another significant impact of a Google departure could lie behind the scenes, where many small Chinese companies, & entrepreneurs, rely on its AdWords advertising service, Gmail e-mail and documents services.
  • Unemployment:- With an explosive population in Mainland China & growing unemployment, such steps will isolate the country from the Global economy and limit the country’s economic growth.
  • Curiosity amongst Chinese Netizens:- It may be easy for the government to allow Google to shut shop, but telling 140 million people to suddenly change their behavior because the government wants to hide information from them, will not be a cake walk.  China may have to deal with great tact to contain the growing curiosity amongst such a vast population. What if they were to find out? My belief is that China will not unplug Google- Hong Kong’s access, but continue censorship and deteriorate their speed & quality such that users gradually migrate to alternate options.
  • Rampant Piracy:- Interestingly, Google (in a Chinese JV) also runs Top100.cn – which provides free music downloads across many labels in an unlicensed manner. There are doubts on the company’s future operations too. Top100 has been instrumental in reducing the Piracy in China which could suffer a dent for the industry as “Piracy thrives on censorship”.

The numerous chocolates, flowers & parting notes left on the Google’s signboard in Beijing office expresses a popular sentiment. Google’s dramatic exit from Mainland China, is no longer a clash between two rivals, but a more symbolic moment in history, which is bound to have an economic, political, technical and fundamentalist impact in the world over in coming times. This could even become a turning point in China’s  communist policies, as well as a revision in defining “A Free World”… and each one of us will feel it.

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