Category Archives: Employee empowerment

Why ESOPs must be doled out very carefully?

In the very initial days at any start-up, when the funds are in short supply and challenges are too many, the new entrepreneurs may generously dole out partnerships just like Ranbir Kapoor in the Bollywood film Rocket Singh – Salesman Of The Year. In the film, he makes the peon, the receptionist and the technician equal partners of his new venture.

The film does not portray the post-sellout disputes which arise in many start-ups due to unclear ownership terms in the beginning. Sometimes, such disputes get ugly and spread in the public media. The ESOP dispute after the famous sell out of RedBus.in, founded by (Phanindra Sama and friends) to ibibo.com is one such recent example. Phanindra Sama had to face a lot of public embarrassment about ESOPs given to some employees, even after not doing anything wrong apparently. It is unfortunate but true.

Start-ups are generally started by people with similar passion and vision but with complementary skills. Gradually, some more people come on board. These people vary in terms of skills and risk appetite. Many of them come with an expectation of a stable, regular paying job. They don’t wish to risk their security for a potentially high risk ownership proposition because they are not sure of the future of the company’s prospects. It is a personal choice which people make based on their own life stage and priorities. So, they consider the offer of ESOPs as an additional bonus which may or may not materialize because of their own uncertainty about continuing with the company or because of the company folding prematurely.

But, as soon as the company gets listed or sold and ESOPs become saleable, greed takes over. Now everybody wants the share. Ironically, if the founder would have lost money, none of them would have wanted to chip in to share a part of the loss.

So, while deciding about ESOP, one should be very clear and objective without getting emotional. ESOPs should not be given to all and sundry who don’t believe in the company or who don’t share the passion that drives the founders. Hiring some people purely on payroll may be expensive in the short run, but it should be considered in the long run if we believe in our own venture’s value generation potential. One should consider this as some more risk in addition to the risk already factored in.

Entrepreneurs must remember that everybody wants to own the success but failure is an orphan. Nobody wants to own it. We should be selective in choosing our drivers and peons who will suddenly develop aspirations to be millionaires without doing any extra bit for the company. During the regular days, they may have thrown all the tantrums and may have tried to avoid work as much as possible, but when the D-day comes, when the promoters decide to sell out, they suddenly woke up to the realization that “WE founded and nurtured this company with OUR blood and sweat.”

Sensibility should override sensitivity. Ensure that you don’t have to pass through the miserable and humiliating situation like Phanindra Sama had to for no fault of yours. Don’t give ESOPs people who don’t deserve it. Let commitment and merit get rewarded.

How to execute? These ADMI students can teach us.

Well, ADMI stands for Alkesh Dinesh Modi Institute for Financial And Management Studies. I attended an MTHR Global event hosted by ADMI at its beautiful auditorium within its vast facility inside Mumbai University campus on Saturday, 27th August, 2011.

On that day, whole Mumbai woke up to a rain-drenched daybreak due to incessant rain since previous night. The morning was no better. After a brief respite, the very heavy downpour had restarted. All the planning for the whole event was facing a possibility of complete failure, because of the heavy rain. But the event went very well, despite all the natural odds faced. It was all due to the great work by the management students of ADMI. Their work on that day was in true sense exemplary. Following are some of the very obvious things which made this challenging success possible.

Plan… Plan… Plan… : As one entered the venue, it became clear that the entire event was meticulously planned.

  • Right at the road leading to the campus, ADMI student volunteers were standing to guide the participants, expecting the question marks on the faces of the visitors looking for the directions and guiding very promptly. Signboards at all turns helped one reach fastest.
  • All the volunteers were given clear roles and responsibilities and the whole schedule of the day and arrangements were well-planned.
  • In fact, the event was planned and executed just like an event management company might have done it (after charging a few lakhs of rupees, of course), but these young people did it themselves, with meagre resources.

Team work works : The entire team of students worked as a single unit. There was continuous interaction and communication among them, as the day progressed and newer challenges kept coming. They solved all challenges by being together and working in unison. There was no boss here, but I think it did not matter, the event was the boss and they respected and responded to its demands…!

Pour your heart into it : Whatever they did they did wholeheartedly. Their complete involvement was inspiring.

  • Every guest was respectfully escorted with umbrellas in the heavy rain.
  • All the needs of the guests were attended to promptly with smile, respect and grace.
  • When the guests entered the walk ways which had become slippery due to rain, these boys and girls politely alerted the guests to take care. I was alerted at least 10 times during the day, by different people, every time, just in time to prevent me from falling…! So were other guests.

Enthusiasm is infectious : Despite the inclement weather and the innumerable and unexpected challenges thrown by it, these boys and girls performed with alacrity. Their enthusiasm was rubbing off positively on each other. This enthusiasm kept them up and running throughout that rough day.

Empowerment gives powerful results : The young students did not have many resources at their disposal, but they operated perfectly in spite of those constraints or limitations. One of the reason for their excellent output was the powers and freedom given to them. They did not have to go to anybody or ask anybody while fulfilling various needs and requests of the guests, some of them may be unexpected, but came because of the rain. They took instant decisions and did whatever was possible to do. The credit for this perfect empowerment must go to their director and the placement officer, who were representing the institute administration at this event.

Take on a crisis as a challenge : Any planning could have gone haywire on that day, due to the very difficult rain conditions. The guests could not reach in time, the speakers were stuck due to rain, the food to be served was two blocks away, and the rain was pouring like cats and dogs. These ADMIs took that all in their strides and did whatever was needed. They converted this crisis into a challenge and overcame it.

It made me thinking : Money may be able to buy many things. But, can it bring in such remarkable enthusiasm? I think, it is difficult to buy. And the organization which has such ADMIs inside it, can overcome any challenge, natural or otherwise. I thank the students of ADMI for showing us the way to perfect execution no-matter-what….!

Here is why HDFC Bank is doing better

Because they serve their customers very well. In contrast to that, the service at Nationalized banks is nothing to be proud of.

Last Monday, I had first hand experience of the indifferent and non-cooperative attitude of Bank Of India, a nationalized bank, and caring and helpful approach of HDFC Bank employees.

We had reached at Vidyanagari Branch (Pune)  of Bank Of India at 2.29 to make fees payment. The shutter was being closed and the person doing that violently told us to go away. On request, he had to say “Time is till 2.30. All have already left for lunch. Go to Swargate branch if you want to make the payment.”

The Swargate branch, two kilometers away, had lunch time from 2.30 to 3.00 pm. When reopened, they refused to accept DD, as they did not know how to process the DD payment of fees. Finally, after a lot of convincing, they relented. But, immediately, the lady at the counter discovered that my DD (issued by HDFC Bank, Malad-East branch) had no signature…! This could be happening in one of the million cases, but then it did happen with us…! She sent me back, rudely saying “Pehle DD pe sign lekar aao… Our bank closes at 4 pm”.

Shocked, I called up Mr Ronak Parekh, my relationship manager at HDFC Bank. He was also shocked to know that the DD had no sign. He assured me that it will be sorted out soon, and told me to go to any nearby HDFC Bank branch saying they will authorize and sign it. I reached HDFC Bank’s Sahkar Nagar branch at 3.35 pm and informed them about the DD without sign. The person told me to wait for 10 minutes till he gets e-mail confirmation from my RM. I told him I did not have that much time. He promptly got up and went to his manager, Mr Sunil Bagade. The manager called up the RM, took his employee number, instructed him to send the email and signed the cheque. I was out in 3 minutes, flat…! I could reach Bank Of India well before the closing time of 4 pm.

It was only due to the prompt service of the branch manager Mr Sunil Bagade, that saved one full day for us. As long as people like him are there, HDFC will keep its customers happy in spite of some human error of unsigned DDs slipping out of the system. Such positive gestures can turn the errors into an opportunity to delight the customers. This is why private banks are scoring over public ones.

We all should try to ensure that all our employees are empowered and motivated enough  to give such caring and prompt service to our customers.