Infosys Case Analysis Essay

? Case analysis – infosys document structure We have approached the case by first analyzing the identified issues, and then associate root causes to those issues. Further to it we have used two frameworks, â€Å"Web of Change† and â€Å"Hewitt Best Employer Characteristics†, to theoretically assess the weaknesses in Infosys Human Resource and Change Management policies. These frameworks can be used by organizations to better plan their change management and human resource management initiatives. We have used â€Å"Hewitt’s Best Employer Survey†, to identify the key initiatives which Infosys should undertake to enable it to reach its target of â€Å"Best Employer† by 2011. Further to it we believe that â€Å"Best Employer† and â€Å"Best Performer† are complementary goals, and it’s difficult to achieve one without the other, and hence we have identified the key initiatives which can help Infosys to achieve â€Å"Best Performer† target without compromising on its â€Å"Best Employer† objective. about infosys Infosys is the second largest Indian IT software services company. Infosys has reached pinnacles of success in short span of 20 years, through innovative business strategies and human resource practices. Currently it is facing challenges around balancing between business growth and employee satisfaction. About its business Model Infosys delivers IT services to its clients globally in a model called GDM (Global Delivery Model). The main characteristic of this model is that it decouples client location and project execution. Project is executed in locations which provide best combination of cost and talent. Project teams are spread across client site and offshore development centers in countries like India, China, and Mexico etc which provide rich availability of talent at competitive cost. Usually teams at client site document requirements and manage client relationship and offshore team manages delivery. This is a human resource intensive industry and the challenge is exacerbated by the fact that most of the resources are highly skilled professionals (engineers, MBAs, computer scientists etc). Being an industry where human resource is your only asset and your only competitive advantage, managing, ssues and Root Cause analysis In this section we’ll analyze the issues identified in the case and will attempt to identify root causes which led to employee dissatisfaction. After our analysis we believe that issues mentioned in the case is symptomatic of gaps in general principles of leadership, change management and HRM. Policies are not written in blood and stone, and they change ov er the lifetime of organizations. What should not change are basic organizations principles around human resource management. Our assessment is that policy changes in Infosys were reflective of external environment and business imperatives. However, diverging from the basic principles of Change management, leadership, communication and employee development in implementing new policies is what led to its fall in Best Employer ratings. â€Å"Stock Options started lacking luster to the new employees and created equity imbalance among employees† Stakeholders involved New Employees Discontentment Impact Inequity of income/wealth effect in the company which created tension between employees. New employees who had seen Infosys from outside as an organization committed to fairness, equity, and employee wealth creation got disenchanted. Root Cause Failure to Manage Expectations This issue primarily arose because of incorrect expectation setting of new employees. Infosys kept on using stock options and the millionaires’ stories as branding activity, even when stock options were no more an incentive to new recruits. Company should have made it very clear about its new compensation philosophy when it discontinued ESOPS. 1. Managing scale and attrition risk Stakeholders involved Employees Managers Discontentment Impact Infosys was growing at a speed where it was doubling its organizational strength every 1-2 years. However organization was plagued by high attrition rate. Employees felt lack of motivation, due to repetitive process tasks, which the business model demanded. Due to high growth, a lot of employees moved up the managerial ladder, but lacked proper training and orientation and hence couldn’t connect to employees Root Cause Lack of Employee fulfillment ( from the job ) Detached Lleaderships To stress on the need for the above two, we’ll give two examples from Indian public sector. Indian Railways Indian railways has recently transformed itself into a highly profitable organization, and according to the officer on special with Railways, single most critical factor which contributed to this success is involvement and commitment of employees of railways despite having a poor compensation structure. Employees of Indian railways take great pride in their work, since they believe they are contributing to the running of the country’s biggest infrastructure and are responsible for transporting of 2 crore customers every days. This association with organizational goal and pride in your organization is what makes an organization for perpetuity. Due to changing business needs, Iinfosys couldn’t connect to its employees in motivating them. Indian Army A unit commander in the army is able to inspire its soldiers to give up their life, compensation etc notwithstanding. The only reasons soldiers are so committed, is their immediate leader. It depends on the unit commander’s ability to connect to his soldiers, motivate them and show a genuine concern for their wellbeing, is what motivates the soldiers to do the unthinkable for their leader. According to research in human resources field, people leave managers and not companies. The leadership skills of managers are the greatest source of employee fulfillment at work. Lack of engagement and commitment of managers towards their subordinates, was probably the single biggest reason for high attrition rate at Infosys. 2. Strong formalization and process orientation, which came as part of growth, took away bandwidth to innovate from employees. Stakeholders involved Employees Discontentment Impact Employees who were used to getting the thrill and satisfaction from using their skill on technical challenges were feeling cocooned because of new process driven and re-use methodology. Similar impact was observed in people policy issues. All personal policies were getting more and more formalized. Root Cause Lack of employee Motivation Resistance to change One of the basic principles of organization design is that you don’t use strong formalization from highly skilled agents (employees). Formalization is for low skilled repeatable tasks. Infosys should have come up with business models aimed at high end, value added services much earlier. This would have kept its inherent talent not only motivated but better utilized for higher margins. In 1990s moving away from body shopping to GDM provide this opportunity, but in early to middle 2000s, Iinfosys couldn’t reinvent itself. Formalization in organizational policies when it grows out from entrepreneurial stage is inevitable. It’s actually needed to ensure consistent implementation of policies and create a sense of equity and fairness among employee. Dissatisfaction on this front could be attributed to resistance to change, and hence effective change management principles should be employed for disruptive changes. 3. Introduction of variable pay Stakeholders involved Employees Senior Management HR Department Discontentment Impact Variable pay was received with a lot of skepticism by the employees, fearing that it was introduced to reduce their compensation Root Cause/s Change Management Failure Lack of Leadership engagement Communication Failure This was probably one of the most disruptive changes introduced by Infosys. The amount of skepticism and distrust displayed by employees was a first in Infosys. Immediate reaction of employees was that this policy has been introduced to cut employee costs to satisfy shareholders demand for higher and higher profitability. The fact that a vast majority of senior management were shareholders in the company added to employee distrust. There was no clarity among employees how this policy will pan out. A lot of employees were not comfortable in linking their performance to factors outside their control (market conditions, decision taken by management etc). Also since the amount of variable component was high (more than 50% for project managers and above), employees could not understand how much their monthly take home were. This is a classic case of failure in change management and involvement of leadership at every level. Infosys data on variable payout shows that most of the time company has delivered 100% payout and even higher percentage to high performers. So employee skepticism bore from lack of clarity and communication on this policy. Lack of clarity, communication and involvement of employees was to such an extent that even middle management was taken by surprise by this policy. Many managers, who couldn’t appreciate the policy implementation, were reluctant in communicating the changes to the employees. For an employee first point of contact for clarification is his/her immediate line manager, hence it’s important to fully equip leadership at every level with information. To understand the role what leadership plays in motivating, retaining employees, we should look at armed forces. Unit commanders are able to motivate their employees to give their life, despite the fact that compensation package of soldiers is one of the lowest. This commitment in subordinates comes because of total commitment of their leader in engaging with them and motivating with them. Immediate line managers are the biggest reason employees leave an organization and are also the main reason employees go beyond their capabilities to outperform. 4. Retaining Organizational Culture with fast track growth Stakeholders involved HR Department Employees Discontentment Impact Due to business growth imperatives, and its business model, Infosys was doubling its employee strength every 1-2 years. To accommodate this type of growth, it had to lower its hiring standards and quality and culture was a victim of this. Root Cause/s Lack of Employee on boarding ( orientation) planning This issue had an impact on multiple facets. It led to a feeling disenchantment in existing employees, as they felt their brand equity in the market was getting diluted. New employees, who were not able to appreciate infosys inherent culture, didn’t felt comfortable and had a feeling that the organization is biased toward old employees. Root cause of this issue was that although organization had changed its selection criteria, it didn’t change its employee orientation strategy, or training methodology. Infosys should have changed its orientation program to be more customized offering for similar group of employees and using existing employees as mentor to help develop organizational culture and values in new employees. Similarly if you are hiring for quantity and not quality, it should have modified its training plan to be more exhaustive. 5. Broad Banding and promotions Stakeholders involved Employees Discontentment Impact Lack of faith in the organization Chaos and confusion in employees minds Root Cause/s Change Management Communication Leadership This policy again created a lot of employee discomfort since they didn’t knew the details of change. It’s again a classic change management failure. Although the policy was designed to bring more clarity in role structure and bring equity amongst similar roles, across the organization, poor communications created fear and scientism in minds of people. We can observe from the reinvention of Indian Railways, one of the reasons organization could progress on the growth trajectory, was employee commitment to the cause of Indian Railways, despite of low compensation. Employees felt proud to be part of the world’s biggest railways and were motivated to excel. Some of the senior managers lacked clarity about policies, hence they were apprehensive of clarifying the policy. This shows a major organizational failure in terms of change management and engagement of leadership with people. Similarly as discussed above, since employee appraisal parameters were not clearly defined, an employee could not appreciate how his/her appraisal going to impact promotions? Web Of Change – Change Management Framework To do substantiate our above understanding of issues at Iinfosys, we used â€Å"Web of Change†, a change management framework to understand the change management issues at Infosys. â€Å"Web of change: is the framework proposed by Stephen Thomas. This model defines 8 change elements as shown below and the web of change helps us to see how the values of each element changed during the Organization Change process in Infosys. The baseline score is the value of the Change elements in Infosys during the glory years of 1990’s and the re-assessment scores the value of the same change elements in the 2000’s when Infosys was going through the â€Å"Growth pangs†.