In the world of ESOPs have employment arrangements gone from commitments to options?

By: Prashant Vijay, 21/11/2016

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Flipkart lands itself on the front-page of the business page yet again for something negative. This time, they defer joining dates for new hires from IIMs, IITs and various other top-tier educational institutions. And at least in case of the IIM-A, offer a measly Rs. 1.5L to the affected students, that too only at the time of joining.

There are lesser known stories of other slightly less famous startups doing this, and worse. Of companies giving offers, and the offer letters not showing up, the CEOs reportedly ‘travelling’ indefinitely, and not reachable?—?the same CEO who made these offers face to face, of companies reducing compensations two weeks before joining, and other shady business.

Yes, the companies have a responsibility to the students, but they also have a responsibility to their shareholders and employees. But poor decision making by a few can meaningfully impact careers of some very bright and capable people?—?people who often lose the opportunity to interview anywhere else because they’ve accepted what they thought was a top-notch offer from a top-notch company. And now hiring season has come and gone, recruiters have hit their campus recruiting quotas, and the world moves on, leaving some very bright people in a state of limbo.

Have employment offers become call options for companies, as a right, but not an obligation to hire employees?

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Putting aside potential employees, current employees also exactly haven’t been treated very well, with many news stories of employees (especially of startups) finding out one fine day that they are now ex-employees, due to “restructuring” or “reorganizing” or “retrenching.”

How we got here

But how exactly would any employer who cares about their brand, especially one who’s in the consumer space, allow themselves to get here? To treat new hires as numbers on a spreadsheet, to be added, subtracted or moved, as convenient, like Flipkart, Stayzilla, or many others? Or to shut-down an office altogether, and give out pink slips to the entire team, a la Tiny Owl?

The Flip Side

Lets look at the other side?—?on how current culture is from employees perspective, and how they treat employers.

Everyone who’s been a hiring manager in India in the last five years, whether in a corporate or a startup, has definitely seen the other side of the coin.

Many employees treat companies as put options??the right but not the obligation to show up to interviews, to join a company after signing an offer, or to treat companies as temporary and replaceable sources for salaries

No Show Naman

Let’s start small?—?the interview. Who amongst us hasn’t seen candidates commit to interviews and not show up. There’s clearly a massive health problem for potential employees and their family members, if I am to believe the texts and emails I’ve received from no-shows, from the ones who even bother to respond. There’s no consequence of not showing up really, so they think its fine to treat interviews as “best effort”, or “if I remember” meetings, but not something they’ve committed to.

New York Namrata

But it gets much deeper than this. In February I interviewed a candidate for a senior role. She was young, but had impeccable academic and professional credentials and really impressed us in the interview. She was in Bangalore and wanted to move to Delhi to work with us. We had narrowed it down to her and one more candidate, and she was still the top choice. So before we made the actual offer, we did a reference check through some common contacts. To our surprise, we found out that she was planning to move to Delhi till December, and then move to the US to get married. So, I called her. Here’s the conversation to the best of my recollection-

Me: Hi Candidate, we like you a lot for the role. Just wanted to get your thoughts on longevity. We are looking at a senior role, and would want someone in for the long haul.

Her: I’m definitely in it for the long-term.

Me: Anything else you want us to know?

Her: No.

Me: So we spoke to someone who mentioned that you’re planning to move to the US in December to get married.

Her: Well, yes.

Me: But I just asked you about longevity, and anything else you wanted us to know, and you didn’t mention anything.

Her: I didn’t want to jeopardize the chances of me getting this job. 

I was speechless after this interaction. Frankly, if she had told us this from the get-go, we could have still made it work, explored if we can do something together in the US. The way it actually went down?—?in my book this is clear lack of integrity, but in her book, she didn’t do anything wrong.

Dishonest Dhruv

There are probably countless instances where potential employees lie through their teeth about future plans of moving, further education, joining their family business or anything that would put a hard limit on their length of engagement with an employer, knowing fully well that if they disclosed these facts, they might not get the job. For any business, especially for early stage ventures, it can be crippling to invest time, effort and money in training someone, only to watch them leave in less than 6 months, where they have gained a lot from the company, but haven’t really hit their groove in contributing yet. It’s even more frustrating for an employer, knowing all the while that they could have invested in someone different who would stay and work through this journey together.

Pissed Off Prashant

Understandably, these interactions leave companies jaded and wary. Do I condone Flipkart’s behaviour? Absolutely not. But can I understand it? A little.

How to Fix The Situation?

The way we are heading, we are making relationships very transactional. That’s a great idea and works well for contract work and the like. My employer, Flexing It, is a market leader in this space, running India’s first and largest curated marketplace for consulting, freelance and part-time projects. But this article isn’t a plug for Flexing It, and is addressing the culture in full-time employment situations as well. For this, change is needed from both sides.

1.      Education System: We need to inculcate good professional culture right in the education system. Final year students in Bachelor’s or Master’s programs should have sessions on professionalism and ethics, so we start setting good habits early. I’ve seen too many placement cells of colleges / b-schools encouraging students to take whatever jobs they can get, and then find a better job later. This sets the seed for the poor behaviour and encourages students to see companies as replaceable sources of paychecks.

2.    Applicants: I can’t think of any incentives, but disincentives can be created. If employers create and manage a black-listed pool of candidates who show lack of professionalism, ethics, integrity, I think we solve the problem overnight. Of course, this is easier said than done. How would I prevent someone who doesn’t like me from submitting my name? Some controls are needed. But I think in this market, this is becoming a necessity.

3.    Companies: It would be great if companies’ management thought more about employee success as much as they thought about their stock prices, investors, and their own KPIs. If you treat potential, current and past employees like valued assets, and not numbers to be played with, you’ll be able to differentiate yourself meaningfully not just for hiring, but in your results. An employee who’s not worried about being let go, or doesn’t have a bad taste in their mouth about how the company jerked them around will be a better engaged employee. With employee motivation, business results should also go up. It’s a long-term investment, and a culture change, but well worth it in my book.

Here’s sincerely hoping for a change in the system, and one that sustains.

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