December 12, 2017

My favorite HR case study – SnapDeal Pay Cut Letter

Filed under: Reviews — Tags: , , , , , , , — Shalini @ 5:41 pm

“You don’t hire because you afford, you hire because you need”

The first thing which came into my mind after coming across the email sent by CEO Kunal Bahl to his employees where he is announcing 100% pay cut off along with the news of saying “Painful goodbyes” to many other employees – that’s commendable. Read the letter

The founders are taking 100% pay cut is appreciable but more than that what impressed me the most, they admitted that they made mistakes, yes they did. But having said that, after reading the email twice I realized, “Did they have the choice of doing something else, apart from taking a pay cut, announcing a layoff, doing drastic cost-cutting and admitting their mistakes? No, they didn’t”.

Coming back to mistakes, here I won’t be talking about the U-turn taken by Kunal Bahl in terms of his/industry’s perceptions about GMV. In his several past interviews where he was seen boasting about Snapdeal’s skyrocketing GMV which made them attract so much funding, to now, where he clearly says “GMV is vanity, profit is Sanity”. I won’t be talking about the statement that he gave to Vikram Chandra while having breakfast on NDTV in January this year that the startup bubble is real and businesses need to move beyond GMV to Rational Metrics like profit margins and customer experiences and to my surprise that very special customer was acquired and given tremendous consumer experience through a red box and lullaby of “Unbox Zindagi”. No, not that too.  I will talk about the mistakes in terms of Manpower Management. I’ll talk about why I feel Snapdeal story has all the potential to become an exemplary case study for the biggies or startups who failed at Manpower Management in quest of GMV/Profits.

In 2011, in an interview to NEXTBIGWHAT.TV Kunal Bahl narrated his story which is really inspiring and I believe many startups have mushroomed after listening to his inspiring words. The office in the residential building’s basement with only a team of 15 people, where parathas were fried everywhere, and potential candidates will come and flee from the gate only after realizing the “workspace is not fancy”. He went on to narrate, how from there, he was then sitting in a beautiful office with amazing infrastructure with 300 people. Wow! He compared those 300 people to 300 Spartans in 300. Well, My question here: How many of those 15 people who watched your snapdeal dream along with you in the basement of a residential building are still there with you? Why do you think those 15 people were with you still in the basement? Do you think people just join great offices and not great visions? Were they valued enough? How many of those 300 Spartans you were so proud of, are not laid off by now or about to be laid off or as you mentioned in your letter, “proactively” agreed to significantly reduce their compensation? Don’t you think you lost your focus in terms of “hiring better” to “hiring bigger”?

In his own words “We started building our team and capabilities for a much larger size of business than what was required with the present scale” Kunal has made this statement keeping the present (2016 onward) scenario in mind but actually this is the mistake which was made in 2009-2010 when Snapdeal was one of the very few companies to receive excellent funding. Things went wrong when instead of hiring for serving a purpose, fulfilling a role, filling a void was replaced with hiring because one can. There is a big difference. The enthusiasm of doing new, doing great was so bright that one couldn’t see. While everyone clearly knows the business is not profitable, apart from making mistakes in terms of “We also started diversifying and starting new projects while we still hadn’t perfected the first or made it profitable” you also diverted from your very own belief of believing in individuals, (I guess you mean Manpower). In an interview to NEXTBIGWHAT.TV, 2011, Kunal said, “Big profits, Margins don’t make great stories, Great stories are about individuals” referring to the team of snapdeal, those 300 Spartans. So the same goes correctly when we fail at something, you didn’t fail only because of lesser margins, bubble idea of GMV, No profitability, you failed because you failed individuals, you failed in manpower. Proof: Announcement of laying of 500-600 people, resignation of many core team members, 100% pay cut-off of founder members.

What went wrong?

I’ll be raw with my words here. Snapdeal sidelined Human Resource as a function. Manpower Management was not given its due. Role defining, role positioning, skill matching, skill mapping, manpower budgeting, all this, went down the GMV drain. CEO wants to do it all, even recruiting. In a conference held through Techsparks 2012, “YOURSTORYTV” Kunal was handling a talk on Seven Entrepreneurial qualities and he did awesomely. He mentioned about how he, the CEO, was busy recruiting whole week and went on record saying, “As an entrepreneur/CEO one has to remain active in recruiting, you can’t leave it to the HR Manager/Recruitment Executive”. I say I wish you had left it on HR. I wish you had taken advice/consultation from some eminent Manpower consultant or experienced Human Resource professional/ Leader at that juncture, it would have saved your time/effort/money and also would have saved careers of many today. An HR leader would have defined your company’s HR needs, roles, budgets, positions and that would have been a wiser decision. If that had happened, if the CEO could focus on Manpower Management, we could avoid this statement today “We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth. Sadly, we will also be saying really painful goodbyes to some of our colleagues in this process.” Your HR leader would have really guided you or advised you on not creating different teams or different layers only so you could dissolve them one day. Besides, that also gives you the luxury of credibility. HR Issues? Question the HR, Sack the HR, not the employees. Not everyone can run a business as successfully as Kunal Bahl /Rohit Bansal, Not everyone can be as courageous or bold to admit mistakes, not everyone can still move on like they doing, not everyone has that vision like they have, but not every CEO can do Manpower Management. Don’t know about others, but this one is going to be my favorite case study for a while

At last my salute to another CEO for the tweet on welcoming people in Delhi/NCR feeling the heat of restructuring, again, don’t make the same mistake, the camaraderie is great, love the tweet too, but careers/individuals are really crucial to managing, don’t hire because someone else is laying off, hire because you need them. Manpower Management is crucial. You all are making inspiring journeys, inspire more.

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