Human capital management

I had the extraordinary privilege of steering the Human Capital Management strategies at Infosys for the better part of the first twenty years of its growth period. Justifying the Infosys tagline, "Powered by intellect, driven by values", coupled with our mission to make Infosys a globally respected corporation, put an enormous responsibility on all of us, to build high-capability human resource teams and concurrently develop and nurture a value-driven organizational culture.

We identified at a very early stage, that 'learnability' was the most critical factor for success in the software profession. We defined learnability as "the ability of the individual to make generic inferences from specific experiences and being able to apply such knowledge in new unstructured situations".

To be truthful, we were not, at that stage, exposed to the theory of multiple intelligences developed later by Dr. Howard Gardner of Harvard University. However, we quickly realized that Logical- Mathematical Intelligence, or abilities in numbers and reasoning, was essential to do well in this field. I set about developing and validating a series of tests that could measure these attributes with a certain degree of reliability.

We also believed that not all of our software professionals need to be drawn only from the pool of Computer / Electronics / Electrical Engineering graduates. We decided to enlarge the catchment area for better access to larger numbers of bright students with high levels of logical-mathematical intelligence.

We were, perhaps, the first blue-blooded software company in that period to recruit fresh engineers from a variety of backgrounds – such as Mechanical Engineering, Civil Engineering, Naval Architecture and Metallurgical Engineering. To select the best, we relied on the Arithmetical Reasoning (AR) and Analytical Thinking (AT) tests that were personally designed and developed by me. These tests were considered to be tougher than the GMAT / GRE tests, and soon, Infosys acquired the 'elitist' tag – word went round that only the brightest engineers could get into the company.

Our faith in our tests was so strong that we even rejected a high rank-holder from an IIT, simply because he did not get the qualifying marks in our tests. The most piquant situation was when Murthy insisted that I request Prof. K. V. Viswanathan, at that time Computer Science professor at the prestigious IIM, Calcutta, to take these tests. We were interviewing Prof. Viswanathan for the position of Head of Education & Research and fortunately for me, he was more than willing to take the tests. Not only did he do well in the tests but went on to build the most effective E&R division at Infosys. Today, the world-class training center in Mysore is equipped to train 14,000 employees and Fortune magazine has called it the "Taj Mahal of training centers".

The most daunting responsibility, however, was creating and nurturing an organizational culture that emphasized the right set of values, so that we could build an institution of lasting value, one that we could be truly proud of in the decades to come.

It was clear to us that the strongest foundation for Infosys had to be laid by the large contingent of our exemplary senior management. Some of the critical qualities that the senior leadership needed to demonstrate by personal example were displaying high levels of transparency, creating trusting relationships, promoting merit and performance-driven rewards and recognition systems, encouraging a culture of bold innovations with a willingness to venture into unchartered territories, and most critically, engendering a sense of ownership among Infoscions by sharing the wealth that they helped to create.

I personally believe that the most significant intervention for emotionally engaging Infoscions was the creation of Employees Stock Offer Plan (ESOP), long before any regulatory guidelines were available. I remember the prolonged discussions with Murthy on ESOP distribution strategies. Murthy was of the opinion that substantial amounts of ESOPs should be given to a smaller percentage of employees who were outstanding performers. I argued that while a small set of people did merit high rewards for their outstanding contribution, the real infrastructure for the growth of Infosys was being built by a large number of very good, but not necessarily outstanding contributors. These professionals also needed to be recognized and rewarded to ensure sustained growth.

I personally believe that the most significant intervention for emotionally engaging Infoscions was the creation of Employees Stock Offer Plan (ESOP), long before any regulatory guidelines were available.

Finally, we came up with an optimal solution where the outstanding contributors were given large numbers of ESOPs through the 'Chairman's quota' whereas most of the good performers earned smaller number of ESOPs over a period, based on their yearly contributions. The 'elitist' Chairman's quota was based on recommendations sent to Murthy, where as the egalitarian ESOP distribution was based on a system of phased allocations for people at various levels.

With this, we created the largest number of dollar and rupee millionaires by any company, and more importantly, created a sense of ownership and belonging among all our employees. Carrying on this tradition, Infosys, on entering the 30th year of its inception, provided shares from the Infosys Employee Welfare Trust to all employees based on their number of years of service at Infosys.

As a measure of our commitment to transparency and openness, I made it a point to visit all Infosys campuses in April every year, to personally explain the rationale behind the salary revisions, promotions, loan policies, ESOP allocations, etc. To demonstrate our genuine interest in employee feedback, I incorporated any good suggestions from employees into the policy framework.

I remember that one year, I made a marginal change in the remuneration of professionals with Computer Science degrees. This was meant mainly to address the longstanding complaint that it was unfair to treat Computer Science graduates with four years of relevant education, on par with, say, a civil engineer who had no such background and needed to be fully trained at Infosys. I decided, therefore, to give a token increase in remuneration to the Computer Science graduates. However, I was surprised to receive very strong negative feedback from all non-Computer science graduates, many of whom were rank holders from their universities. They were very unhappy that the commitment I had made in the campuses that all graduates would be treated as equals was being violated, albeit in a small way. It was the principle of honoring a commitment that they were insisting on and not the amounts involved. I accepted the fairness of the argument and immediately converted the small extra payment to Computer Science graduates into an extra allowance and restricted this payment to that year alone.

Over the years, the innovative HR strategies at Infosys have been receiving accolades worldwide, with the latest being the Global HR Excellence award 2010 by the World HRD Congress in January 2010 for the 'Most Admired and Best HR Team'. Given the complexity of managing a highly talented workforce of more than 1,30,800, drawn from more than 85 nationalities and deployed across the globe, Infosys can be truly proud of its performance in the area of Human Capital Management.