Salary Structuring: A Primer

Well, let’s admit it. At some point in our HR Career, we have all wondered: should we include DA mandatorily in the structure, should we keep the Basic Pay at 30%-40%, or Should CTC include Gratuity? Certainly, I did, especially as I come from an Engineering background with no formal education in HR. The beauty […]

Well, let’s admit it. At some point in our HR Career, we have all wondered: should we include DA mandatorily in the structure, should we keep the Basic Pay at 30%-40%, or Should CTC include Gratuity? Certainly, I did, especially as I come from an Engineering background with no formal education in HR. The beauty of lack of HR knowledge was that I had to find each of these stuff from scratch for which the web and my fellow HR colleagues from and around Kochi helped. Special thanks to the connections I received through NIPM (one of my imminent blogs is on why HRs should network; catch you there soon!).

In this article, I intend to give a primer—a very basic understanding—of how we can structure the salary in India. I would speak of the structure as of 2021, to the best of my understanding, belief and practice.

Wait, tell me about the parlance!

Before we begin, let’s make sure that we get the terms right. During my tenure as an engineer, I never cared about the terms such as Gross Pay and what mattered was the CTC and Cash in Hand. But as an HR professional, there’s more to it and I believe all folks across all departments should get an idea about the payroll parlance. Here’s the gist:
A high-level overview of components of CTC

  1. Cost-to-Company (CTC): This is an accounting term with no legal definition whatsoever. You cannot find this term in any of our labour acts. You use it for your convenience, or for accounting purposes. No one else cares (except probably the job applicants).
  2. Employee/Employer Contributions: There are some mandatory contributions that employee and employer have to make periodically. While employee contributes Employee EPF, Employee ESI, TDS, Professional Tax, Employee Labour Welfare Fund contributions, etc., the employer also needs to make contributions such as Employer EPF, Employer ESI, Employer Labour Welfare Fund contributions. Employee contributions are deducted from the Gross Pay, while Employer contributions are outside the Gross Pay. More on those terms below. Please note that EPF and ESI are mandatory only if your organisation falls into the respective requirements.
  3. Gross Pay: Before I define Gross Pay, we must understand that the CTC is the sum of all payroll expenses an employer incurs on an employee. Basically, CTC includes the salary and other expenses the employer incurs (more on that later). Now, let’s split the CTC as (What Employee Deserves + Extra Expense for the Employer). Here, the “what employee deserves” component is the Gross Pay. Look at the Venn chart above.
  4. Net Pay: An employee has to pay statutory (or even non-statutory) contributions such as EPF, ESI, TDS, etc. These contributions of the employee are deducted from the Gross Pay. In effect, the Net Pay = Gross Pay — Employee Contributions.

Well, we got it covered; pretty much!
It’s important to have the right mixture of components for a tasty meal.

What all are in the CTC?

Elementary, my dear Watson! CTC = Gross Pay + Employer Contributions.

Oh wait, I got your question. You’re basically asking, what all can be there in the ‘Employer Contribution’, correct? Well, the answer is ANYTHING. You can include the mandatory employer contributions as detailed above, plus some other stuff. Some companies include valuation of ESOP in the CTC, some include the amount that the company pays for insurances for the employee/family, etc. As a standard measure, let’s keep the statutory contributions such as ER EPF, ER ESI, ER LWF and the like in the CTC. The best practice, in my opinion, would be NOT to include benefits and other rewards in the CTC with the purpose of inflating it to look attractive. Variables are welcome to be included in the CTC, but we need to mention that they are variables.

How do I structure the Employee Salary?

We’ve finally come to the million-dollar question. How do we compartmentalise the salary? I am trying to explain this in the form of a FAQ compilation below:

What are basically the components of Gross Pay?

Broadly, let’s say, Gross Pay contains the Basic Pay, DA, HRA, and other allowances.

Why have you mentioned HRA separately, even when it is an allowance?

HRA has some exemptions with respect to definitions of wages (e.g: EPF calculation where HRA is exempted from consideration).

Okay, understood. Now, tell me whether that DA is mandatory?

As long as you are paying above the minimum wages (read my other article on Minimum Wages to understand how DA is calculated), you can subsume DA in the Gross Pay, without having to show it separately. There are certain occasions (e.g: in the case of those who are using the Wage Protection System in Kerala) some organisations are forced to show DA separately, which I would have no objections against.

How about Basic Pay? Is it 30% or 40%?

Basic Pay used to be defined as any percentage of the Gross Pay by organisations at their will. But as per the proposed Code on Wages, 2019, to be effective from Apr 1, 2021, the (Basic Pay+DA) component should be at least 50% of the Gross Pay (legal nerds, please do not raise your eyebrows; I have used the term ‘should’ as in suggestive parlance and in a practical sense). Assuming that you are not showing DA component in the salary structure, let’s then fix Basic Pay as 50% of the Gross Pay.

Remember, if you are following 30% or 40% of Gross Pay as Basic Pay, you are recommended to revise the same to 50% wef Apr 1, 2021. This will, also, have impact on your financials such as Earned Leave Encashment, Gratuity, etc.
Earmarking the right amounts of the CTC under various heads is not only mandatory but the right thing to do.

Aha, I see. So Basic is Fixed. How about HRA?

HRA is NOT a mandatory allowance. But it is a general practice to provide HRA for the employees to meet their accommodation expenses. Further, HRA is exempt from income tax, while Basic Pay, DA and allowances such as Special Allowance are fully taxable. HRA has an income tax exemption rule, which is three-tiered, details of which I am omitting for now. For metro cities, a maximum of 50% of Basic Pay can be non-taxable, while in non-metro cities, it is 40%. I would then suggest that we go with HRA = 40% of Basic Pay if you are in Kerala.

We’re getting close. Now tell me about ‘Other Allowances’?

Code on Wages mentions about Retaining Allowance, which is an allowance provided to the employee for the retention purposes (this should be part of the offer letter if you are providing it, and you should call it ‘Retaining Allowance’ itself). Generally, new-age companies, usually do not include this in their structure and provide the rest of the salary as “Special Allowance”.

So, in short and in a crude form:

Gross Pay = Basic Pay + HRA + Special (Other) Allowance.

Can you explain it as a salary structure?

Well, that’s my job to explain. Here it goes:

Component Amount
A. Basic Pay 50% of Gross Pay
B. HRA 40% of Basic Pay
C. Special Allowance Remaining amount to reach the Gross Pay
D. Gross Pay Sum of (A), (B) and (C)
E. Employee Deductions TDS, EE EPF, EE ESI, PT, EE LWF, etc.
F. Net Pay (D) — (E)
G. Employer Contributions ER EPF, ER ESI, EDLI, ER LWF, etc.
H. CTC Sum of (D) and (G)

Table 1: Sample Salary Structure

You can find the PDF of the above structure with an example here.

Wait, where is the Conveyance Allowance?

Conveyance allowance is a thing of the past. HRs usually included it in the salary structure since that component, up to an extent, along with Medical Reimbursement used to provide some tax benefits to the employee. Not any longer. It stopped two years ago when the concept of standard deduction was introduced in the union budget and there is no point of mentioning Conveyance Allowance in the pay structure unless you want to have one more column for your Finance team to manage.

(But wait, the Conveyance Allowance may sound well for salary structures when Code on Wages comes into force on Apr 1, 2021. That’s a different subject to talk about; but for starters, look at the exemptions from the definition of ‘wages’)

No, it can’t be this simple. I do not see any other allowance—such as LTA, Books and Periodicals, etc. Where are they?

Now we are on the right track! Well, these allowances are non-mandatory allowances, but at times provide great relief for the employees from a portion of their income tax. Such allowances are in fact reimbursements against actual bills, though some of them are paid in advance under the expectation that the employee would submit the bills to the employer by the end of the financial year.

Now to answer the question, yes there can be some such allowances as part of the salary structure. But they are simply the babies of the ‘Special Allowance’. Special Allowance (even this one is not a mandatory allowance; we use it as a filler bucket to make sure that the components add up to Gross Pay) is fully taxable. One can split the Special Allowance into smaller allowances/reimbursements so that a part of it becomes supposedly non-taxable. That’s a story for another discussion, which you can see in my next blog—Flexi Benefits as part of Salary Structure.

Okay, but you didn’t tell us about the statutory calculations yet.

Fine. Here’s the snapshot. Tables speak better.

Component Per Month Contribution Observation
EE EPF 12% of (Basic Pay+DA+Other allowances excluding HRA) Go with 12% (Basic + DA + Special Allowance)*Some orgs have been exempted and some have 10% contributing rate
ER EPF 12% of (Basic Pay+DA+Other allowances excluding HRA) Go with 12% (Basic + DA + Special Allowance)*
EE ESI 0.75% of ESI Wages ESI wages include all components including Basic Pay, HRA, Special allowance, OT, etc., but excludes components like Annual bonus, Retrenchment compensation, and Encashment of leave and gratuity
ER ESI 3.25% of ESI Wages Same as above –
PT Depends on your state and salary range. This will help you
EE LWF Rs. 20/- for S&CE LWF in Kerala. Differs based on the nature of establishment
ER LWF Rs. 20/- for S&CE LWF in Kerala. Differs based on the nature of establishment
TDS On the Employee’s Earnings. Depends on the existing Income Tax rates
EDLI and admin charges Details here One may or may not include this as part of Employer Contributions

Table 2: Statutory Deductions on Salary
* Assumption: No other ordinarily paid allowances (other than those like OT, Performance-based incentive, etc).
Legal deductions are the savings for the retirement of your employees. Help them plan right!

So far so good. But I have read that there is a cap for EPF contributions. What is that and how is it incorporated in the salary structure?

Yes, EPF up to 12% of Rs. 15,000/-, i.e. up to Rs. 1800/- per month by Employee and Employer each is mandatory. If the (Basic + DA + Other allowances except OT, Bonus, HRA, etc.) is less than 15,000/- per month, then the EPF contribution will be less than Rs. 1800/-, which is fine. Suppose the above amount is Rs. 25,000/-. Then the 12% of 25,000 = Rs. 3000/-. The employee is not liable to pay this entire amount to EPF and can decide to cap it as Rs. 1800/-. This would mean that the employee’s EPF deduction will be Rs. 1800/- instead of Rs. 3000/-, meaning the net salary might increase since the deduction is lesser.

Another catch here is, the employer is liable to pay the equal contribution as the employee makes. So if the employee decides to cap it at Rs. 1800/-, the employer can also do the same, which may be a loss to the employee in the long term as a hole on the savings. But modern-day organisations tend to transfer the benefit of this capping to the employee, by fixing the CTC and increasing the Gross Pay to match the difference, still, all of them totalling to CTC. This would mean that the employee might get a higher net salary even if s/he caps the EPF contribution, but the transfer of benefit depends on the employer and is at their will.

The post is getting longer by the minute. Would you like to conclude?

So, in short, our intention is to add up the component to Gross Pay and then add employer contributions to reach the CTC. When an offer is made (or a salary revision is recommended), companies usually look at the total cost that it would incur. The rest is on HR to design the structure in the most favorable manner.

More fun on the way

The calculation to sum up earnings, employer contributions, etc. to reach the CTC is pretty straightforward with simple arithmetic calculations. But it can become slightly complex when you are given a CTC and asked to bifurcate it to various components especially when there is a cyclic dependency is involved (e.g: ESI contribution depends on the components of the salary structure, while those components depend on the ESI contribution).

This is not rocket science and can be solved with a system of first-degree multi-variable equations. As long as we have HRMS in place, this won’t be a headache, but don’t you think it would be fun to go back to high school math and see how that helps in the above HR situations? Post your responses in the comment below and let’s see who gets it right first! Let me blog on the math later.
Salary Structuring may be an operational aspect of Human Resources, but it definitely is an important piece of the job.
This article is also published on PeopleFirst, LinkedIn and Medium.

Content retrieved from: https://peoplefirst.in/salary-structuring-a-primer.

Software Engineer and Getting Paid below 17,742/- per month? Well, something’s wrong! Let’s look at the Minimum Wages!

I am sure your you were curious as to why the number 17,742/- for a Software Engineer when you clicked on the link to land this article. Let’s see in detail. By the way, if you are a software engineer in Kerala getting paid below this figure, it’s probably the time to send this article […]

I am sure your you were curious as to why the number 17,742/- for a Software Engineer when you clicked on the link to land this article. Let’s see in detail. By the way, if you are a software engineer in Kerala getting paid below this figure, it’s probably the time to send this article to your HR Manager 😉

Context

Recently, on Dec 24, 2020 to be exact, Government of Kerala announced the revised Minimum Wages for the Software industry in the state, after long 10 years of the earlier revision. Numbers have soared up. This article discusses the concept of minimum wages, with examples pertaining to Kerala state; however, the concept should be the same throughout the country.

What’s this “minimum wages”?

As the name implies, the minimum wages is the minimum wage per month to be given to an employee of a particular sector in a state. There is a national minimum wage declared by the central government, and various state-level minimum wages. The idea is to keep the state-level minimum wages equal to or above the national minimum wages. The concept of minimum wages will ensure access to equitable and justifiable pay, thereby eliminating the chances of exploitation by the management.

When is it decided?

Minimum wages are revised periodically. Minimum wages are defined for each sector separately. For example, the minimum wages for Software sector differs from that for the Oil Mills sector. There are roughly 80 such sectors identified for the State of Kerala; and similar numbers for other states as well. Governments revises the minimum wages when it deems that there is, inter alia, a significant increase in the cost of living over a period of time which is not manageable by a mere increase in Dearness Allowance (DA).

How is minimum wages calculated?

Minimum wage calculation for a role is easy. For example, look at the latest Software industry minimum wages notification for the State of Kerala available here.

If you look at the notification, in the Software sector, roles of jobs are categorised into different grades. For instance, an HR Executive is a Group F employee in the industry, while a Software Engineer is a Group E employee. An organisation needs to categorise all their employees into one of these grades (and, if not already done by any means whatsoever before, it would be advisable to communicate the same through an HR letter/notice, through internal HR portals, payslips, etc. to the employee so that they are aware of the same) Let’s take the example of Group E: Software Engineer for illustration purpose.

Demystifying the Minimum Wages Calculation: An Example

If you look at the Group E: Software Engineer, 16520-250-17770-300-19270 is the salary range shown for this role. What does that mean, let’s have a look!

The minimum wage for an employee who is a Software Engineer in an organisation is Rs. 16520. This amount is exclusive of another factor called Dearness Allowance (DA), which we will see about later.

Now, look at the number 250 in the wage structure. What does it signify? The notification says:
For every five years of completed or to be completed service in an establishment or under an employer, an annual increment at the rate next to the pay scale fixed in the new scale of pay shall be paid as service weightage to the employee concerned.
So, if an employee continues to be a Software Engineer under the same organisation/employer, then for every such service year, a minimum pay hike of Rs. 250/-pm should be paid as service weightage. That is, for someone with salary 16520/- as per month salary, and completed one year of service, s/he should get a minimum wage of Rs. 16520 + Rs. 250 = Rs. 16770/- pm during the second year of service. Every year, this figure per month will increase by Rs. 250/- for the first five years. Hence, s/he will have a wage of Rs. 17770/- pm during the fifth year of service. That’s the third number appearing in the pay structure.

Now, one can see a 300 next to 17770 in the pay structure. That means, we’re now done with the first five years and reached Rs. 17770/- pm as minimum wage for this employee. Hence for the next set of 5 years, the minimum wages should be increased for every service year by, not the old 250 but, Rs. 300/-. Hence, on the sixth year of service, the employee should have a minimum wage of Rs. 17770 + Rs. 300 = Rs. 18070/-. This will continue for the second block of 5 years. Hence, at the end of the 10th year (i.e. the fifth year of the second block), the employee should be getting a minimum of Rs. 19270/- pm as the salary. After the 10th year, the mandatory pay hike stops. If the employee gets promoted to a higher Grade, that’s a different story, in which case the minimum wages for that role will be applicable.

Image Courtesy: Investopedia

What if one gets more salary hike?

Good for them. The minimum wages talks about the minimum wages to be given, and the minimum pay hike to be given for every service years. If your pay is already above this level, then the employer is NOT obliged to give you the 250 or 300 pay hike.

Now, tell me about DA calculation?

Dearness Allowance is calculated based on an index called Consumer Price Index (CPI). I will skip the economy part and would encapsulate that it is a statistical number published by Dept of Economics and Statistics for various cities in the state, and it depicts the fluctuating cost of living. They publish it here.

DA is a mechanism provided to adjust the salaries for change in CPIs. If you look at the Minimum Wages notification, it says:
In addition to the basic rate of wages, all the employees shall be eligible for Dearness Allowance calculated on the basis of the Consumer Price Index published for the concerned District Head Quarters of the Department of Economics and Statistics at the rate of ₹ 26 (Rupees Twenty Six only) for monthly waged employees and ₹1 (Rupee One only) for daily waged employees respectively, for every point in excess of 300 points of the latest Consumer Price Index Number in the series 1998-99=100.
There are five parts to it:

  1. DA varies for each city (read district HQ)
  2. The rate of DA is Rs. 26/- for monthly waged employees
  3. DA is calculated for every point in excess of 300 points
  4. CPI is published periodically
  5. DA for this sector is calculated basis the CPI in the Series: 1998-99=100.

With these reading in mind, let’s calculate the DA for an employee posted in Trivandrum. Look at the CPI page on the EcoStat website and choose the latest month for which CPI is available. As I write this, it is Nov 2020. If you look at the Trivandrum’s CPI value under the column Estimated Indices for Base : 2011-12 = 100 Base : 1998-99 = 100 for Nov 2020, it is 369. That’s our little guy.

Now, we need to find out the DA from this 369. As per the #3 above, DA is calculated on the CPI-300 value. Here, it is 369-300 = 69.

We need to pay Rs. 26/- per month for every point in this 69. That means, the DA per month for an employee posted in Trivandrum is Rs. 26 * 69 = Rs. 1794/-

DA is paid over and top of the above minimum wage. DA may change when CPI changes.

Tip: An organisation need NOT provide DA as a pay structure component. They can subsume DA component in the gross pay and make sure that the gross pay is above the (minimum wages + DA) figure. But it would sound problematic for organisations who use the Wage Protection System, which mandates the DA component as such, in which case one may decide to keep that little guy in the pay structure.

Are we talking about Gross Salary or Basic+DA?

With the introduction of Code on Wages, 2019 (to be in force from Apr 1, 2021), all confusions with respect to the definition of wage will vanish. You may consider the Basic + DA + Other ordinarily paid allowances (other than OT, commissions, performance-based incentive, etc.) as the wage for this purpose, meaning we’re talking about the Gross Pay. Confused about Gross Pay, CTC, etc.? I’ll write about it in my next article 😉
Compliance is a Culture.

When is this to be effective from?

This notification is to be effective from Dec 18, 2020. Even if December 2020 and/or January 2021 salaries are already paid out by the employer, they are to abide by these changes. If there are revisions to be made as per this notification, then employers have to comply and give arrears wef Dec 18, 2020.

For the existing employees, if the salaries are to be revised to comply with this notification, then the employer must take care of the service weightage as well.

Where can I see minimum wages for other sectors?

Govt of Kerala published minimum wages notifications on this page. This is the old notification for the Software Industry.

An exercise

Well, now find out the minimum wages to be paid to a Senior Software Engineer with 3.2 years of experience in the current organisation in that grade, and posted at Calicut. Post your answers in the comment box and let’s see how many of you get it right 😉

This article is originally published on PeopleFirst blog, LinkedIn and Medium.

Content retrieved from: https://peoplefirst.in/software-engineer-and-getting-paid-below-17742-per-month-well-somethings-wrong-look-at-the-minimum-wages/.

#MeToo? Better Late than Never!

The topic was “Sexual Harassment & Consent”.
The recent happenings made it more feminine. Hence the female lot majored the show. But there were a few men who considered it as Unisex. Hats off to you MEN.
Now, what’s sexual harassment? To give more clarity, we were given an activity.
Need to close our eyes & think of the happiest moment (sexual in nature) in one’s life. Now find a buddy seated next to you & share that experience. I had a glance at my peers & could see serious discussions with a psychotic smile on their faces. My buddy was my good friend Ms. Sreelekha of Amphenol FCI. We were chatting instead. Now you need to share how you felt while sharing that beautiful experience.
Then on one corner, a male participant complained, “I discussed everything with him but he never shared anything with me.” Hearing that all had face aches.
NIPM Infopark Group and NASSCOM POSH Session 2018
Click to view in larger size
We got the real feel when they mentioned, “if you find it difficult in sharing your beautiful sexual experiences, how hard it will be to share your sexual experiences that haunt you.”
Even though this is a familiar term, we could feel the pain then on. Monolita & Saj gave an amazing start continued by Shyama explaining the legal side of it.
NIPM Infopark Group and NASSCOM POSH Session 2018
To cut the story short….major focus was given to sexual harassment at the workplace & the importance of having POSH policies, legislation & redress process pertaining to POSH. It was a really good learning experience. Moreover, simple acts we need to follow were given due attention in the session.
NIPM Infopark Group and NASSCOM POSH Session 2018
Packed with activities, sharing, fun & awareness, it was a 100% interactive session for which the speakers had to borrow some more time from the organizers to solve the participants’ queries.
Great job, ROV & thanks much to NASSCOM & NIPM Infopark group for the wonderful show.
NIPM Infopark Group and NASSCOM POSH Session 2018
The above article was written by Kshama Sandeep, Director-Recruitment, Glowmind Recruitment Consultants, who was an attendee in the POSH workshop organised by NIPM Infopark Group and NASSCOM Kochi. The accounts are on personal capacity.

The Agony and Ecstasy of Working as HR Professionals in Organisations Today

‘You should not stop being people’s advocate! The day you end being one is the day the HR dies’.

These words which I happened to randomly listen to while working at Oracle as an Engineer, later became the cornerstone of my HR career. While I believe that any job has its own merits and fashions, there are certain jobs that have the capability to make impacts of higher gravities. HR is one, nevertheless, it goes a thankless job in some organisations.

HR, like any other job, is like a two-sided coin. You will have happy days; and then there will be days that give you a headache. Interestingly, the primitives on which the functions of an HR are based invariably embrace the ‘headaches’. What’s fun if things go as in the books; HRs come into play when things are not in line or if there’s no line at all. Thus, the headaches become opportunities. We cannot really see these as binaries—either yes or no—but grey. Let’s have a closer look:

Leaders with People Mindset

HR team’s vision will only be successful when your company has a management that believes in people. Forget your company’s revenue, business strategy and everything else; it’s the faith of the management in the people business and their mindset of treating people as the largest investment that drives the success of any HR team.

Starting from the CEO, every C-level and VPs should have a clear understanding and buy-in to the policies that the HR team parks on. This is the biggest factor of all which decide if an HR’s life is hell or heaven. This article on HBR says that during 2008 recession, only a  third of HR departments were consulted when layoffs happened, pointing to lesser influence HRs had in strategic business/people decisions—this is fast changing now.

It’s imperative for the modern day HR to work closely with the line managers as well, to make sure that the ‘people mindset’ envisaged at the top level trickled down appropriately at the length and breadth of the organisation. The organisation’s profitability comes only through the growth; and growth comes only through its employees and culture—not the C-officers alone! HR is certainly a partner in strategy execution, and hence they should have business acumen and understanding as well as the people mindset. 33% of execs believe that there’s ineffective HR leadership that drives their organisation to the unsolicited directions as per this HBR report. This can be tricky and painful for some of us, but definitely the need of the hour; it has always been, but clearer in the recent years.


Data and Opportunities for Analytics

With the advance of technology, data has come to play a major role for the HR as well. This has helped establish data-driven strategies. Since most HR operations have gone digital, HR gets instant access to the data and can run an analysis on it to reach faster and effective conclusions. Analytics has resulted in the greater impact of HR activities starting with talent acquisition through engagement to exit.

Changing Workforce

Gen X is fast coming to the top of the ladders, and most ‘workforce’ now comprises of Gen Y and Z. The millennials tend to pose and trigger a change in the way most HR teams function. The factors that excited Gen X may no longer be valid/needed for the Gen Y/Z. This needs a larger discussion in all organisations, where HR takes the lead role.

Starting from how your recruit talent to keeping them engaged should change due to this workforce change. Your ‘food coupons’ or ‘telephone reimbursement’ may not be an attractive benefit as it used to be. Your vacation plans, office timings, attire requirements and health initiatives may need a thorough change keeping in mind the interest of the new workforce. This is one place where HR gets into agonies or ecstasies. This also points to changing your HR practices and policies to accommodate the new-styled workforce who love things to happen faster and easier.

Pay Gaps and Diversity

Gone are those days HR recruited the ‘protagonists’ alone. Ideologies and societal factors keep changing, and Diversity & Inclusion (D&I) has become another opportunity for HR. While this is seen as an ecstasy from a philosophical standpoint, various reports suggest that the pay gaps and men:women employee ratios are still really bad in numbers. The report from WeForum suggests that in 82 out of 142 countries, pay gaps based on gender is still increasing. This is alarming, and agonising for the HRs, for they have been trying to establish a reverse scenario through D&I and localisation initiatives.

KPMG reports that HRs around the world struggle to keep in line with the global workforce, which turns out to be an agony for the HR fraternity, yet. With globalisation, teams become more and more integrated and agile, which HRs must run fast to cope with. Increasing number of remote, and arguably virtual, employees demand that the HRs tighten their belts.

Attraction, Training and Retention

Organisations today want not job-seekers, but talents. For example, in IT, with the massive ‘attack’ of automation over the services sector has diminished the glitter of the old glossy, silky texture of the industry to a great extent. Companies today want to find talents (“attraction”) rather than applicants finding them for jobs (“acquisition”). The onus is on the HR team.

The new organisation have a diverse workforce that constantly looks for enhancing their skill set. The old school training curriculum is undergoing a thorough revamp, which is, yet again, equally agonizing and ecstatic for HRs. Starting from the training modes—virtual to gamification to anytime anywhere learning platforms—to the training content, organisations are thoroughly revamping their L&D strategies with the Gen Z in mind.

Another area of concern for the HR is retention. It’s way beyond creating a good brand; stories float about youngsters rejecting offers from big brands to choose what they want to do in small companies. Retention plans of the new age is another agony for HRs, planning of which needs a thorough analysis of their workforce as well as the industry trends. People don’t just stay back for money.

HR Tech: the future

As it goes without saying, HR Tech is already here. Yesteryears’ Personnel Manager changed to HR, and then got transformed into People Enablers over a period of time. The new role of HRs will be that of technology and business leaders enabling people functions with the help of cutting edge tech. Coming of tech into HR will certainly reduce the job opportunities of the existing HR workforce, but wait! It’s a two-sided coin again. While this is seen as an ‘oh-my-god-am-I-gonna-lose-it’ scenario, why don’t we look at the brighter side of it? It gives us room for learning technology and pouring it into what we have been doing, thereby making a yet greater, happier, better workplace! Ain’t it ecstatic?!

Disclaimer: Any of the discussions above does not reflect the views of author’s present or previous employers. Views are all personal. Originally posted by Arunanand T A on his blog peoplefirst.in

Internship reloaded

India is riding an optimistic wave of becoming a global superpower. The country is set to achieve this on the wings of its burgeoning human capital that is predicted to reach 116 million, with the majority of the new workers to be in the 20 to 24 age bracket. But there is one small problem, a very simple and straightforward problem – only a very small percentage of this workforce is considered employable by the industry. Internships are being touted as the panacea for this problem of unemployability.

The nation as a whole seems to be laying the responsibility of creating and executing internships at the doorsteps of the corporate world. While smarting under the unfairness of this, corporate India, with the inherited arrogance of capitalism tends to shrug it off as an inconvenience that does not add value, thereby accentuating the reputation of callousness.

Thanks to my role as the co-founder of an Ed-tech startup – Fourth Ambit, I find myself equipped with some unique insights into this ecosystem inhabited by three organisms: (A) The Industry (B) The Student body and (C ) The College. While I do not believe that internships are a one-stop solution to all problems related to employability, I am optimistic that they can indeed be used as a tool for bringing about lasting change.

Before we proceed, for the purpose of discussion allow me to define “internship”.

“Internship is a brief period of engagement, with or without pay, between the student and the organisation so that the student may gain experience in a particular field of study. This term of engagement may be conducted during the course of the college education or when the student has just graduated. An ideal time frame would be between 2 to 6 months”

The Industry and Internships

There are a handful of organizations across India that have internships as part of their recruitment agenda and therefore have the attention of top management. This translates to an allocation of resources for this endeavour. However, most of these organizations offer internships only to the premier B-Schools and a few Tier 1 Engineering colleges of India.

For the rest of the lot internships are at best, a bullet point in the annual report and at worst, a knee-jerk reaction to young students who suddenly turn up at their office like an unexpected and often unwanted guest.

Please note that I am not even acknowledging the companies that take money from the students under the guise of internships and end up issuing a certificate at the end of the period.

If you are part of a team or the sole voice for propagating the virtues of internships in your organization, I hope you will find this to be a handy guide for instituting an internship programme.

Groundwork within the organization

  • Plan for internships should be created and approved with the annual resource budget plan. This will ensure that there is buy-in from the top management and accountability at the lower levels.
  • Once approvals are in, the departments that have opted for interns should be mandatorily required to submit clearly defined projects with timelines and expected deliverables from the interns.
  • There should be a mentor for each project. This should not be a force fit as the mentors can create or destroy a good internship programme. Never assume that the mentor is automatically equipped to handle interns.
  • Please ensure mentors are “educated” to guide and mentor the students. Very often you hear mentors making snide remarks such as “What do they teach you at college?”. This is completely counter-productive. A certain amount of sensitizing would be required for the mentors.
  • The mentors should conduct weekly reviews for the interns ( not more than 2 sessions a week of 30 minutes each)

The Intern and the Internship

If you are the anchor for the internship programme in your company, remind yourself that the interns are young and certain things need to be spelled out clearly to them.

  • Create a detailed orientation plan for the student intern. Understanding their project and its implication for the whole organization will ensure their buy-in. ( This should also include company policies, especially on “anti-harassment” and privacy issues. )
  • Spell out the benefits that the students gain from this programme – especially if they are not paid a stipend.
  • One of the key skills not taught at college is time management and creating processes. Ensure that both the anchor and the mentor stresses on this and guides the intern effectively.
  • Create networking opportunities for the interns – either an executive lunch hosted by a CxO or a “Hi-Tea”
  • Ensure that you collect detailed and anonymous feedback from the interns at the end of the programme. This will help with future improvements.

A seamless execution of these would ensure that your interns go back to college as your brand ambassadors.

The College and the Internship

At no point in history has there been a stronger trend of colleges and industries working at cross purposes than in the last one decade. The aim of the colleges is to beat the maximum pass percentage out of the student population. If that means teaching by rote, then so be it.

To expect people with limited resources and unlimited restrictions (I mean the teachers, of course) to manufacture employable graduates may be a utopian dream, but there are measures that the industry can put in place to assist them on this journey.

  • Identify partner colleges where you can make recommendations on the skills that the students need to be equipped with when they appear for internships.
  • Extend “Learning and Development” within the company to the faculty of the colleges on a pro bono basis. Teach the teachers how to teach so that ultimately you do not spend a lot of time retraining the students who enter the workforce.
  • Give candid feedback after the internship is completed, not just to the students but to college authorities. A constructive feedback mechanism will help colleges help their students.

It may not be possible to implement all the suggestions given here in the very first attempt. As with any project intended to make lasting change, internships should also be looked at with a long-term plan for the company. Beyond creating a recruitment pipeline for the organization, internships in the truest sense is experiential learning and a certain amount of preparation will go a long way in making this a meaningful journey for the students.

 

Ruby Peethambaran

Co-Founder, Fourth Ambit Technologies Pvt Ltd 

She can be found on Linkedin at https://www.linkedin.com/in/rubypeethambaran/

Welcome to NIPM Kerala

The Kerala Chapter of NIPM, with more than 1200 Individual Members and 47 Institutional Members on rolls is one of the most vibrant Chapters of the www.nipm.in – NIPM Kerala Chapter has been regularly organising Workshops & Learning Programs as part of its core objectives towards enhancing capabilities of the HR fraternity.

Following are some of the popular activities:

  1. HR Con Kerala – a biennial HR Conclave 
  2. Annual Legal Update – Flagship annual workshop providing relevant employment law related updates.
  3. Chapter Level Business Quiz for Management students
  4. HRM Skills Workshops for practicing professionals – HR & Non HR
  5. Labour Law skills workshops for practicing professionals – HR & Non HR
  6. Enhanced Employability Certification programs for job seekers and for final year Students at various B-Schools – on periodic as well as upon request by institutes.
  7. Young Managers’ Contest on “Innovative Employee Engagement Practices” for Practicing HR professionals etc.
  8. Quarterly Magazine – Kerala Personnel to share knowledge snippets relevant to members.
  9. Annual gathering of members and family – which occurs after the Annual General meeting.

The chapter had initiated blogging some time back and the Old blog posts can be found on www.nipmkerala.wordpress.com.

The chapter is glad to present this platform to promote unique thoughts and approaches from HR practitioners and business professionals.

Professionals desiring to be featured on this blog may send in their requests via EC members to kc@nipmkerala.org

The chapter can be reached on the internet from the following Social channels:

Facebook – https://www.facebook.com/nipmkerala/ 

Twitter – https://twitter.com/nipmkerala 

Linkedin – https://www.linkedin.com/company/nipmkeralachapter/

Instagram – https://www.instagram.com/nipmkerala

Website – www.nipmkerala.org