What led to Infosys' HR crisis?

There is no doubt that Infosys became arrogant, overconfident and self-absorbed by its past success, rues Shyamal Majumdar

Sometime in the middle of July 2012, a mid-level Infosys employee sent an email to media houses listing out the reasons for her frustration over what’s going on in the company.

The reason for her angst was a series of pro-Infosys articles, which she felt were hopelessly out of touch with reality.

The email mentioned, among other things, a culture of entitlement (as opposed to meritocracy); internal people being bypassed for promotions and getting no increments, while outsiders were being recruited at high salaries; an opaque system wherein the information flow from senior management is virtually non-existent; and a skewed compensation structure wherein sales people were at a huge advantage over their software development counterparts.

. . .

The executive, who has since left the company, had requested that she remain unnamed.

The lady is surely feeling vindicated now since her analysis of the Infosys work culture at that time has an uncanny resemblance to what N R Narayana Murthy said last week at the company’s annual general meeting.

She was bang on even about the last point.

As Murthy said, entry-level sales people were starting with a 10 to 12 years advantage over entry-level software people.

The extraordinary speech should be a case study of how a company, once known for its path-breaking human resources practices, allowed things to degenerate.

. . .

While the speech pointed out many loopholes in the system and how things have been or are being put back on track, the most significant was Murthy’s admission that Infosys did dilute meritocracy and accountability in the last decade.

That’s damning for a company which was once at the forefront of India’s knowledge economy.

Many are looking at this as self-criticism as well.

And that’s because the leadership vacuum, which led to many of these problems, was caused by Murthy himself.

He was the one who propounded the flawed philosophy that leadership had to be rotated through the co-founders.

. . .

For a globally competitive company, reserving the CEO chair for a select group only served to choke Infosys’ talent pipeline since the meritorious knew they could never make it to the top job in the company.

The situation worsened as the management lived in self-denial, blaming the market for all of Infosys’ struggles, even though competition prospered in the same market.

There is no doubt that Infosys became arrogant, overconfident (the management started thinking they had customers in their pockets for life) and self-absorbed by its past success and hence, in many ways did not advance organisationally and culturally like some of its peers.

. . .

As a result, many employees started seeing it as a sweatshop, relying more on commodity business and increasing its focus on offsite rather than higher margin onsite business.

The appointment of its first non-founder CEO would hopefully help Infosys get back to the good old days of meritocracy.

But it would be a long haul since moving from a culture of entitlement to a culture of merit takes time and courage. Entitlement, as described by Judith Bardwick in her book Danger In The Comfort Zone’, is an attitude where people in authority believe they do not have to earn what they get.

In a culture of entitlement, peer pressure to perform is supplanted by peer pressure to conform; and companies and institutions that believe in a culture of entitlement often see the strong being weakened to strengthen the weak.

. . .

The main task for the new management at Infosys, therefore, is to bring meritocracy back into the system, which mandates that the strongest people in the workplace be fully supported and leveraged, and weak people weeded out.

For meritocracy to come back into the system, one of the prerequisites is to give employees the tools, coaching, support and leadership to make the transition.

In his speech, Murthy has detailed a few such initiatives he has taken after his return as executive chairman.

One of the most significant steps that got buried under the attention-grabbing headlines was Murthy’s move to build a sophisticated system to measure the productivity of software engineers -- a first in India’s information technology industry.

. . .

The move indeed has the potential to transform Infosys at the fundamental level since it would help a software engineer to see on a daily basis how productive he or she is with respect to the rest of the team.

The move to encourage technical competence -- through measures such as creating a separate stream for excellent code writers and revising the career path for excellent technology architects -- and a more robust education and re-training programme for engineers given the rapid changes in technologies, would surely play a critical role to encourage meritocracy in a sector where a lot of skills are still considered to be intangible and, therefore, can’t be measured.

In short, Murthy’s speech is an absorbing study on how great companies can be hurt if the right decisions are not taken and people are not empowered enough.

Over to Vishal Sikka.