Case Study: A dormant volcano?

Summary

With lots of young entrepreneurs emerging these days, we have plenty of ‘young organizations’ with pure ‘youth culture’. However, the young blood has all the fire in the belly needed but miss on experience. As the organization grows, experience is required to propel the business forward. In phase of rapid growth, this becomes difficult for organization to balance the experience, expectations and exuberance. Internal talent versus external hire is a big question. Under a pressure to please all employees as well as live up to expectations of investors, some organizations falter badly while creating HR processes and policies to ensure fairness. 

INTRODUCTION

Everythingsold.com was started around 6 years ago by a bunch of techies. Nobody guessed that time that an experimental venture in internet shopping space, started with 10 thousand contributed by each of the six funding members, will be looking at a billion dollar topline very soon when they will publish their financials in next three months. Not that it was the pioneer of it’s sector, yet everythingsold.com was focused to deliver the value to customer.  Perhaps, that is why it is a household name in Indian e-retail today. The company grew up exponentially in last six years and especially in last two years. Everything grew multiple folds- employee base, top-line, number of units sold through the portal, number of customers; you name and the growth would be minimum three folds. With average age of less than thirty, the company is a dream company to work for – for most of the youngsters these days.

GROWTH STORY

The growth of everythingsold.com is one of the most talked about story in Indian business world. Two and a half years ago, the website used to sell only small electronics. Today everything except fresh food products is available there. Not only new products, but refurbished and other second hand products also are sold through the website. The variety available in terms of products, prices and variants has made it most popular shopping website among youth, students, young working people and even some tech savvy elders. The internet boom, lack of time, busy schedule and high purchasing power further catapulted the company into next higher orbit. People started to prefer ordering things online and wait for delivery rather than going to malls or shops, park their vehicle, spend time and incur other allied expenses like parking, fuel, movie and a burger at McD or a cappuccino at CCD or Barista. 

Till around three years ago, company was still establishing itself despite three years of existence. Not many people were there who would buy things online. Hence very standard risk free products only were sold. In other words, Indian consumer believed in touch and feel shopping and hence only where the products had standard features and came in company sealed packaging was sold. The delivery network was also confined to fifteen odd metro cities across the country. Suddenly, the touch and feel started vanishing and people were ready to take the risk while buying things. Some consumer friendly policies acted as one of the catalysts. Busy schedule led to conflict between office timing and physical store timings and over-exhausted work brigade preferred to relax over the weekend than to indulge in mundane shopping. Today, the company delivers in almost every city of the country. The product range as mentioned covered almost everything except property, automobiles and food. The exponential growth has given further wings to the company’s plans which is planning to enter into many other new categories which were missing from it’s product gamut.

EMPLOYER OF CHOICE

Everythingsold.com has become a big name today with growth story no short of any fairytale. The company is on radar of all highly qualified professionals who are looking for a job change. It has managed to attract talent from all premier business and engineering schools as well as established reputed organizations. With lot of growth plans to implement, there is no dearth of opportunities for people who are able to show the right value proposition in case the company decides to invest in them. Initially, the organization was considered to be young blood’s organization with a ‘youth culture’. While hiring a senior industry expert, the company had an embarrassing moment as there was no-one in the organization who could suggest a suitable school for that person’s ten year old son. Fresh premier school graduates preferred joining an organization with free culture and the company responded by selecting the best of such young talents. The company as it grew in terms of scale, needed super specialized industry experts to lead different teams- existing or to be formed. Being a blend of technology, retail, supply-chain and finance, the company needed subject matter experts for every function. The exponential growth in the past and aggressive plans for the future acted as magnet for almost everyone who think that they have a relevant profile for the organization. The organization was very much in news recently as some of the industry big names recently joined the organization to lead some of the existing as well as evolving functions. Some active efforts towards media management and public relation helped the magnetic field created by the organization. And even then there was an iota of doubt in somebody’s mind, the publically announced fat pay checks of founders and their new swanky cars ensured that doubt is cleared. The company could not boast of great people’s practice to retain and engage people but at the same time the growth and dynamics which company has to offer, hardly any other employer in the country can match that in today’s time. A sudden change in compensation for one of their business vertical, practically put them on hundredth percentile among the pay masters for the particular skill.

THE BEGINNING OF THE PROBLEM

People who joined everythingsold.com could be bucketed into three tenure groups. Those who joined around three and half-four years ago or earlier, those who have spent between one and a half to two and a half years in the organization and thirdly those who have joined in last one year.

The majority of people who joined more than three years ago, grew exponentially as they set up a lot of things in the company. Some also got some fancy title associated to their names as they had to meet external people and became big fish in small pond. These people headed a function when the function was smaller in scale. Now, with expanse of business, most had their sole control been diluted to being a co-owner. Not that their overall account size in terms of revenue and strategy has been diluted as every sub vertical now in terms of product traffic is much more than erstwhile overall portfolio. The responsibility and finances grew yet, on paper they are no more heading the function. They are either one of the co-owners or deputy to the new head of the business who is invariably the one with salt and pepper hairline and extremely rich pedigree. Since their earlier awarded fancy titles cannot be removed, the organization had to award heavier titles to new heads. Most of the senior people joining these days are either ‘senior director’ or ‘senior vice president’.

Considering the fact that average age of people with longer tenure in organization is around thirty, the question is that are these people hitting their glass ceiling?

The next set of people who joined around two-two and a half year ago joined a lesser known entity that time considering that the growth they can get from a start-up. They were further attracted to the organization by seeing growth of some of their known people in the organization. However, everythingsold.com became a small-mid size organization from a start up a bit too quickly around the same time, thanks to some external pulls. Hence to match the pull, the company hired external talent and those joined in hope of exponential growth, did not get the anticipated thrust in their career. To make it worse, around two years ago, the organization dabbled with their appraisal cycle timing and went back and forth a couple of times to avoid clashes with seasonal fluctuation in retail business. This led to some delay in people’s appraisal. The dissatisfaction in this set is now getting evident. People have started to hit out openly now and raise their concern about what is next in store for them.

The third set of people who joined in recent past was mainly subject matter experts and industry veterans. These people were put on top directly. This is major cause of discontent in people who have joined earlier. The earlier joined people had to part away with the baby which they incepted and nurtured for quite sometime. This dissatisfaction is also leading to some insubordination at various levels. From organization point of view, everythingsold.com had to adopt industry best practices and had to grow for being the country’s number one e-retail. But somewhere, it‘s people strategy is not working well. A recent survey among employees and people who left in last one year, highlighted this discontent in old employees. The top heavy hiring with exorbitant job titles has led to a cold war between old and new sets of people. Fearing an overtaking cartel, the old employees are rejecting all the references from new employees at the interview stage despite the merit of the resume. To counter that, new employees are going all out to point the mistakes of the past and attribute it to the inexperience of people running the business then.

The absence of Leadership and Development function compounded the problem for the organization. The trainings on next step and inculcation of soft skills are missing. Hence almost everyone is missing the clarity on how to grow further up the ladder and enhance one’s capability and competency. Most of the promotions in the past have happened on demonstration of good work at one’s existing level and not on the basis of readiness for the next level. The evaluation never considered softer aspects but only functional expertise. Hence some incompetent managers on the top are just adding fuel to the fire. People who joined more than two years ago worked closely with founders and then top management.  With many management layers externally hired between the two, the employees are feeling that they are now cut-off from the top management team with whom at one point of time, they had the privilege to work closely.

WHAT TO DO

Mohan, the HR head for the organization is no new to the organization but surely to HR. He joined almost 4 years ago and has grown tremendously in one of the business functions. After taking over as head of human resources recently, he knew some challenges will greet him. The organization has not been able to drive a culture in the organization as no HR head has stayed in the system for more than ten months. Despite the inkling, he is taken by surprise. Such strong feelings/ reactions were not expected. He is now having a big challenge in his hand as around 50-55% of the employee base is more than 2 years old in the system. Considering the job change trend- people change job after 2-4 years, these people are vulnerable to external market. The growth of competitors is further worsening the situation. At a major growth state, organization cannot afford to lose their old war horses. These people will carry lot of stakeholders relationship along if they leave and new comer will definitely take some time to settle and kindle the same level of passion and drive.

In next couple of months, appraisal evaluation is coming up and if people are not taken care, the problem can only get worse. At the same time, taking care of such large population in one go and having a populist approach may not be the best way to solve the situation. Is it really a problem or is it over-hyped fear? What should be the approach now and what is the real problem; are the two big questions for Mohan now. Is it a phase every organization goes through or they have missed one of the tricks?