Friday, 14 August 2009

The rem conundrum

Every year, the second leg of the soap opera (see previous post for the first leg), is the drama over the increase in remuneration for the employees.

If there is one person, everybody in the company loves to hate, it’s the guy or gal titled “Remuneration Manager”. Many years ago we had a worthy in the company I worked in. It was widely known that he had AIDS (now that was the time when AIDS first surfaced – OK OK I know it was a long time ago). The “news” caught on like wildfire. It became so widely known that the originator of the rumour had to issue a clarification that he meant Annual Increment Deficiency Syndrome !

Some very involved research study is done and the recommendation is made that the average increase should be 3.97%. This goes through at least 27 layers of approval. If it’s a foreign company, it goes right upto the HQ , wherever it is in cuckoo land. Imagine some firang/waiguoren, who can’t point out your country on a map, deciding the rem of Miss Rajalakshmi / Wang Xiao slaving away at the corner.

After 3 months of such approvals process, with fantastic value addition all the way through, the rem increase is reduced to 3.79%. Then some “adjustments” are made to this number for people who are 1 rated, people who joined middle of the year, people who are being promoted, people who were promoted last year, people whose names begin with the letter A ……

Even more intriguing is the process of calculating bonus/variable pay/ incentive (whatever name has been coined for this abomination). I am yet to see an organisation where the formula for calculating bonus is less than 3 pages long and requires a PhD in mathematics to understand. And yet this doesn’t daunt Rajalakshmi or Wang Xiao. She will do intricate research on the equation and point out two ways by which you can get a higher bonus without doing extra work – only for both of them to be plugged at the end of the year by the Rajalakshmi/Wang Xiao equivalent in HR. I am absolutely willing to bet that in any organisation the number of man hours spent on bonuses is more than the number of man hours spent meeting customers.

Why complicate lives all this much. Pay the Rem manager to stay at home. And then adopt Netflix’s approach (see a few posts below)

- All pay is fixed ; no bonus
- Every year your rem is revised to what I have to pay you if you are being freshly hired.

On second thoughts, this may not be a good idea. What would we all moan about then ?

6 comments:

  1. Right - what can we moan about then?! :-D Good one, Ramesh! I love this HR bashing week! :D

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  2. Ramesh .... firstly once you are done with all your HR posts .. I shall send an email to you on how I liked/disliked each of them and for what ...secondly ... I am amazed at the detail at which you know the business process(es) end to end .... it is very inspiring to know such clarity in observation ...bravo !!!

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  3. wow never thot there was so much head-breaking going on for the remuneration process...the netflix's approach sounds good...but employees will still be moaning even then...if not this then there's something else like the infra-structure in an office?

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  4. Loved the names you chose--rajalakshmi and wang xiao.Perfect fit for the point you were making.

    Loved this post as well as the previous one which was cynically and sarcastically, yet so accurately observed and conveyed.

    Cheers
    preeti

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  5. @thoughtful train - I'm feeling a little chastened having bashed HR too much !

    @blogueur - thanks for your kind words. touched that you found time to read sitting on top of boxes in the middle of your move.

    @rads - Moaning is our birthright.

    @preeti - yeah in a sarci mood. have to redress this onesided ranting !!

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  6. Oh please don't stop the sarcasm. You see, change can probably come around if some HR guru happens to read these posts and it finally clicks in their heads. So for the greater good of all concerned, it would be great to know more!

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