Daily we read some good or bad news coming out from Indian Startup Ecosystem. It’s buzzing with Hiring and Firing. It has plenty of merger and acquisitions. It has got vibrant personalities who grab headlines mainly due to their utter talent and rarely because of their nonsense. It has got companies which are able to give a fight to world leaders. It has got companies which boast of a possible “Layoff” by throwing some unrealistic targets at its manpower.

Somehow in this bloody battle of market share and profitability, talent is getting manhandled.

Recently, it’s Snapdeal that came in news for its planned way of layoff of 200 BPO employees by giving them unrealistic targets to achieve. Snapdeal justification of so called layoff was that “There have been no layoffs at Snapdeal.  As part of the ongoing performance management and development program, some team members at our Contact Center have been offered a Performance Improvement Plan (PIP). While many team members have opted for this opportunity to improve the requisite skills set, some team members have desired not to undertake the PIP and have instead decided to move on voluntarily.”

If the explanation of Snapdeal is considered truth behind the so called “Layoff”, it implicates that the problem lies with the employer itself and not with the employees. Instead of blaming employees for the same, Snapdeal should have analyzed the possible loopholes in the system and should have taken the actions to rectifying them. First hiring beyond what is actually needed and then throwing them out on the basis of imposed “not achieved targets” is definitely not the way to the top of market.

And this has forced us, at FS Labs, to analyze the present situation thoroughly and then looking into how this stand of Snapdeal is going to affect the Indian Startup Ecosystem!

Snapdeal Layoff - Startup Hiring and Firing Phenomenon

[A] Why Companies Hire Fresh Manpower?

Rising Quantum of work at Existing Location

Recruitment process for any of the companies is quite robust. It generally starts with identifying the need for human resource. If  any department within a company registers that it need manpower, then that need should come on the basis of rising quantum of work which that particular department is handling, nothing else. If Snapdeal had hired so many numbers of human resources in the past, we guess they must have done so with a notion that their existing staff was not enough to carry out the work load.

But again this type of manpower hiring is selective in nature. Companies choose limited number of people and check whether its excess workload is being taken care of by the new entrants. This ensures the hired manpower was well needed and is not taken for granted (Sudden ultimatum for firing).

Plan for Business Expansion

Another reason for fresh recruitment is business expansion to a new location. It requires building of altogether a new staff. The recruitment is done exhaustively and smartly. Company ensures that it hires right talent in right amount.

Hopefully Snapdeal, riding on the latest funding and collaboration might have looked to expand its business as well as human resource pool.

To check Attrition

Another reason for hiring fresh talent is to check the attrition rate.  Attrition rate generally goes high in case when there are loads of opportunities in the market. Simply to keep its talent stock alive, most of the companies’ manpower either on bench or on its hiring list.

[B] How Companies Motivate Its Manpower to Get the Best Out of Them?

As per the defined “Ms of Management”, it only “Man” who has the ability to integrate the other resources in the best way to get the optimum output.

  • Having a clear work distribution among team and departments
  • Giving them realistic targets.
  • Giving them required time to achieve desired outcome
  • Keeping a milestone check for every task
  • By promoting the team culture amongst the work force.
  • By appreciations and appraisals.

[C] Snapdeal Layoff – Potential Reasons

Looking for the recent step of SnapDeal FS Labs tried to gather the possible reason for this extreme step-

  • It didn’t hire the right talent – If a large pool of employees (200 numbers) are not able to perform in the expected way, then that means either they are not suitable for the job and the recruitment process was not suitable to judge the fitness of candidate for the role or the type of targets which they were given were unrealistic.
  • It didn’t train the people properly – Once recruited, companies offer some training to mold the mindset of employees as per the need of job role. If large mass is not able to achieve the targets for which they were recruited and molded, the clear implication is that the strong training was not provided to employees.
  • Targets might have been unrealistic – Snapdeal PIP (Performance Improvement Plan) states that employees must achieve 85% customer satisfaction score. Failure in achieving the target would result in termination from the company. As per Snapdeal employees the targeted score was impossible to achieve as the company score had never crossed 62-64%. If the CRM figures are considered as the base for Snapdeal Layoff, it’s obvious that the problem lies in CRM itself.
  • Problem in System Itself – Customer satisfaction is affected by the service that company provides, not by the BPO employees who are just to facilitate the consumers about company existing system.
  • Expansion Plan didn’t work – Whatever business expansion Snapdeal were expecting, that did not happen. So the man power which they hired to cater the need of extended business was absorbed into existing work only and suddenly there was less of work and more of manpower.

[D] Snapdeal CRM Issue – Loopholes and Way Forward

What are the Possible Loopholes in System?

Let’s identify all the factors of Snapdeal business model that could affect the satisfaction level of consumer –

  • Product Related Information
  • Ease of Browsing, Comparing and Ordering
  • Delivery Time
  • Reverse Logistics/Return
  • Payments and Refunds
  • Call, Mail and Chat Support

Any of the above mentioned factors or a combination could be the reason of low customer satisfaction level. When hundreds of other players of same domain exist, customer always starts comparing them on different verticals. So its overall system and strategy which is responsible for success rather than Call/Mail/Chat supporting team itself.

Check points for keeping loopholes aside

Since Customer Relationship Management  is quite logical and emotional subject, Snapdeal should have taken following methods to find the root cause –

  • Historical Data Analysis – Snapdeal should analyze the historical data of consumer behavior that highlights the major areas of CRM concern. Based on the frequency, percentage and weightage of factor, root cause could easily be identified in the existing setup.
  • Consumer Feedback – Dedicated surveys are also a good source to find the root cause why customers are unhappy.
  • Comparative Analysis – Comparison of CRM strategies with other players of same domain could be a strategy to anticipate the impression in consumer mind.

Potential Solutions

Based on the factors that are contributing the most in less satisfaction level of consumers, Snapdeal should have taken the relevant action to overcome the same.

For example – if majority of consumers complaints are because of delivery time issue and product quality related, the logistics team should take care to enhance the performance of delivery item and quality of product should be controlled at vendor base itself.

[E] Effect of Snapdeal Layoff decision on Indian Startup Ecosystem

So Suddenly Layoffs are becoming the trend of startup industry. Snapdeal being at the top of this industry is obviously setting a bad example. Following issues may arise in future as an aftermath of this mass layoff –

  • Talent availability might become an issue for Indian entrepreneur based startups. Poorly laid plans, distant profitability dream and unrealistic targets might force the available talent pool to think about going into startup industry.
  • Job Security in startups might become a dream for even the best of the talents. If market leaders start behaving like a $10 million company which has no future plans for its employees, it’s not the right direction in which Indian Startup Ecosystem is heading to. Anybody would never know how much time a startup would keep them engaged. Forget about job security.
  • Credibility of startup might get affected in external consumers as well. If a company is not able to take care of its internal customers, why external consumers should trust.

FS wish that Snapdeal must have analyzed the scenario very well to understand the problem in its Customer Relationship Management vertical and have taken the mature decision.

Stay tuned with FS labs to know more. Till then happy reading.

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