Too much Financial Control in organisation.

I have worked with many organizations and each company has its own way of controlling finance.
In some companies we never know who is in finance as as all the decisions related to cost and benefit are taken care by Delivery or direct management.
There are some organisations where Finance has say in everything. This type of management is dangerous for growth of organizations.

I can't take the name of companies for legal reasons but i can quote an example how the finance nose the impact your organization.

A company has dedicated Travel department to book the travel tickets for employees. A request is raised by the employee and it goes for approval to Line manager. Now request is moved to second line manager could be Delivery manager, approves the travel. But before this second line manager could approve they need a thing called budget. So the request goes to someone in Finance (business finance manager) to allocate the budget. Wait a second before this BFM could approve the request they need money at account level. So the request goes to someone AVP level to allocate money to account level. So BFM approve the amount. And Second line manager approves it finally.

This entire process can take 2 weeks or sometime forever if the person who wants to travel does not chase these folks. So ultimately the travel date nears.

Travel booking team books the ticket what ever is cheapest at the moment. So it could be the 3 time higher amount if the tickets could have been booked 2 weeks before as it is a last minute. Similar thing happens with Accommodation arrangement higher price are paid for hotel booking in last minute booking.

This kind of complex decision making process ends up with,

1. Poor money management
2. Poor results
3. Too much actual cost considering too many people's salary, process, system, last minute cost
4. Low employee moral
5. Low customer confidence
6. Missed revenue and missed opportunities
7. Damage to company image.

Above is real life example how having too much financial control could jeopardize your goals to become successful organization.
  

Certificate of Coverage from EPFO in India

Introduction 

The Government of India has executed an agreement with many countries on Social security. They have signed similar agreement with Australia effective from 01/07/2015.

As per agreement employee can avail a certificate of coverage from the designated authority from home country. This certificate needs to be submitted to foreign employer upon joining such service as an evidence of coverage of social security at home.

EPFO is authorized to issue such certificate for Indian employee who are going to work in foreign country under the same employer or their foreign subsidiary. 

How to generate Certificate.

1. Access online application for COC using following link. http://search.epfoservices.org:81/IWU/coc_application.php
2.  After filling all the details, click save tab then the form will automatically convert into pdf and reference number will be generated on the application form on right side.
3. Take a print of the form. Submit to your employer for attestation.
4. Submit the signed copy to EPFO regional office along with your Passport photocopies. 
5. Regional office will verify the details and issue certificate of coverage. 
6. Submit the certificate to foreign employer subsidiary or concerned department.

What are the benefits of having COC?

Foreign employer will not deduct any kind of Provident fund or Superannuation contribution from your payroll after submitting certificate of coverage. 

Countries like Australia where superannuation is heavily taxed. Employee will be receive such money on normal tax rate along with payroll.

Y

You

A

What is right time?

A great quote by Barack Obama “If you run you stand a chance of losing, but if you don’t run you’ve already lost.”

All of us are not born manager nor born to work only with one organization. Working with some company is not like your marriage. It means complete give and take relationship.

There could be many reasons to quit the organization. But what if you are aware it is time to quit and look for another one.

In this article, I am going to discuss with you all the early signs.

1. When you hear too much about company being is sick or is about to be sold or it is up for sale. Many will think it is rumor and nothing else. There are corporate managers who prefer wine communication to spread the real news rather making it public in an official manner.

2. Somebody is being given too much attention due to his/her flattery nature. Management seeks mediocre resource rather a technically sound. I believe it is time.

3. You're doing the same kind of work for a long time. You have asked your organisation to provide you with something new to work on. Your organization simply denies to provide you new roles and responsibilities.

4.  You have been working on the same pay or lower pay compare to your colleagues and market conditions. Your organization simply denies to provide you better pay irrespective your innumerable attempts. They gave you promise to provide you hike in next year and they do not honor their promise.

5. You are getting a better opportunity to work on better assignment and a new organization is offering you little bit pay raise you. Still it better to move on.

6. Many of us would have experienced that why I am coming to this office. There could be many reasons behind it. You may be ignored by your colleagues and superiors.

7. You are given with unachievable targets. These targets are measured with your performance. Everybody knows it is not possible, still they want to you to do it. It has only one meaning that they want you to quit. Generally happens in sales marketing profiles.

8. You often hear from your superiors they do not want people with HR issues. Remember there is nothing called HR issues. It is common phenomena to demotivate employees. It is a tool to harass you. HR issue means you do not flatter them.

Retaining talents in small setup

We all come across in a situation when we start feeling an anxiety to get out of an organization. It all happens because of various parameters that affects our day today professional life.

Small setups are generally hugely affected by outgoing talented resource. There could be several reasons when one would look for a change.
1. Distance
2. Travel time

3. Pay
4. Work Environment
5. Appreciation
6. Career Growth
7. Brand Image
8. Job Security
9. Work life balance
10. Leaves
11. Company policies
12. Management
13. Work Resource
14. Employee Development activities
15. On site work

List can go on an on.

A small setup can work toward above parameters  to improve attrition rate.

Distance and travel time are affected by the mode of transport Companies can offer pick and drop facility for employees. Alternatively if it not possible to provide such service they can offer like patrol incentive and can introduce car pooling kind of concept. So the employees will reach on the time to office.

Pay : It has been a debatable topic how much to pay. A start up has to offer to good pay to attract a good talent in organization. Also they should remember not to over pay somebody who is less qualified compare to other employees.  How to we judge who is less qualified. Simple answer is Year of Education, Education institutions, Number of years experience, Kind of work he or she has done in past. For example a person with undergraduate degree has 5 years of  work experience. Another person with post graduate education has 5 year work experience. In this case generally companies tend to pay equal which is incorrect. Because another guy has invested more in education so ideally he or she has total 2+5 = 7 year experience. This is one of the example where company tend to make mistake not to consider education.
You can pay equally to an accountant and clerk even though both have same experience.

to be continue....

Flattery and its effects on corporates

Every human being is once a while is affected by flattery word in either way of life. Flattery has many synonymous like Adulation, Blarney , Servility, Sycophancy , Cajole, Butter up , Pay Court to etc. In Hindi we called it Chaplushi. Now I am sure you must be clear. What do I mean to discuss here.

Birth
There are only two type of people in any corporate. One want to grow by shortcut and other by way of hard work and knowledge. Since world is very demanding. First kind of people do not hesitate to do things beyond that they are required to do. Desires to get quick success without work gives the birth to word called Flattery in corporate.

Story
Perhaps the best known story regarding the downsides of flattery is Aesop’s fable “The Fox and the Crow”, where a fox comes upon a crow perched on a tree branch, holding a piece of cheese in its beak. Eager to have that piece of cheese, the fox calls out to the crow and starts to flatter the bird about how attractive it is and how it must have the most beautiful voice of all the birds. The fox asks the crow to sing a song so that the fox could enjoy its beautiful voice.
The crow, caught up in the flattering remarks being given by the fox, opens up its mouth and lets out a squawk, causing the cheese to fall from its mouth down to the ground where it’s snatched up by the fox. As the fox walks off with the cheese, he tells the crow “Do not trust flatterers”.

Effects on person subject to flattery
Prof. Sengupta of Harward says Flattery, has an insidious ability to worm its way into the unconscious, where it creates persistent feelings that could affect the outcomes of all kinds of business interactions, from job interviews to sales to boardroom presentations.'
Even Subject's conscious mind knows that they are being flattered by the opposite person. Still they are obliged to listen from the other person due to their unconscious mind which likes flattery.

One who is subject to flattery can learn a good concept from below quote.

  Flattery is like chewing gum. Enjoy is but don't swallow it. - Hank Ketcham 

Effects on Corporate

Flattery Corrupts both the receiver and the giver -  Edmund Burke 

Knavery and Flattery are blood relation. -Abraham Lincoln 

Any thing which is bad in nature will always have bad effects. Same concept applies here as well. People who are dishonest and corrupt in nature like to receive and give flattery. Flattery has ruined several empires in past. Due to flattery management chooses to close their eyes for several issues which could have adverse effects on the growth and stability of the empire.
Since flattery is involved as human level, first adverse effects also starts with human working for organization. Employee iteration increases, People who wish to stick with organization start working toward a common goal flattery. Thus organization goals gets neglected. Vision and Mission of organization are never full filled.

Size of organization does matter ?

There are different approach of pursuing career by an individual. Some may land up working with a Large organizations or some with a small in terms of number of employees. Since I come from Information Technology industry. I have made few observations after working with different type of organization.

Working with a small organization has its own merits and flaws.  An organization could be a service or product oriented or both. Since service oriented company has always scope to grow in terms of large head count.  It is opposite when it comes to a product company.  You may not need a army of thousands to develop a best product. It is generally done by a bunch of people. Let say few hundred.

When people join a small organization they come with an expectation of  big growth in career. I have observed that there is difference in approach of working in IT industry within India and rest of world. People in other countries may be working on a same position for a longer period. But in case of India doesn't work. People have to grow with the years of experience on the ladder of management in a company.  But questions is How many people we need as people manager in a small company ? How many lead positions we can afford to in small bunch of organization. If employee knows that he will not grow in long term in term with company.  They may start looking for different opportunities where they can grow.

Now Question is how to retain these people?  Well It always depends on management how they want to mold their company. Identifying a right people as a leader is very important for the success of a organization.
Lead should not be one who does not understand business at all. Lead should not be just a people manager.  Lead should be awarded with responsibility with authority to work. Authority to groom and build a team. People always look for road map of their career. if there is a good lead to groom them it may work for small company.
So It is very important for a person to decide on the size and type of organization based on his or her career aspirations. 

Human Transactions - Give and Take.

Today, I learned a basic but very important concept about the society from a book. It talks about the human transactions. It says ' If you want to understand a person's character look closely at their interpersonal behaviour or their transactions.' Transactions are interaction between two people. It is about give and take.

Above concept is very basic and can be applied in any where in your life. Whether be it your family, friends or your colleague.

Now if you are manager or employee you must be thinking what should it give in return to complete transaction. 

Employee : As a employee you are obliged to perform your duties toward achieving the common goal of organization. Sharing knowledge with your peers and motivating your subordinates. It doesn't mean that a employee should indulge himself in sycophancy to his managers , peers or subordinates. 

Manager : As a manager you can complete your transaction by completing duties towards your organization, your peers and your subordinates. To complete the transaction from employee side a manager should also complete his or her transaction by motivating or acknowledging. 

I will look forward your comments. 

Employee Transportation

Companies are opening office in remote location due to lucrative government policies. So be it on the name of SEZ or rural development. When a company opens a office in a remote location or in a SEZ one of the basic problem they face is adequate skilled resource in the particular region.  Because of this sometime they get settled with local resource with less skill set.
There are many cities in India which lacks proper public transporation. Many orgnaizaitons are providing transporation faclity for employees to offset this problem.

Employers who provide transportation benefits for their workforce gain many rewards for their company.
Providing these benefits can help your company:
• Attract and retain workers
• Reduce payroll taxes
• Increase customer access to goods and services
• Expand service hours
• Reduce gas emissions and conserve energy
• Demonstrate company support of work-life balance
• Support public transit
• Enhanced corporate image as an environmentally and worker friendly company

Your views and comments are welcome. 

Motor Insurance in India

Today, I am sharing my experience with Motor insurance claim process in India. Before I start explaining process, Let us understand some of basic thing about a motor policy. 

Motor insurance is mandatory for all types of motor vehicle in India. A vehicle can be used for Commercial and non commercial purpose. Motor insurance is also known as Auto Insurance and Vehicle Insurance.

Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from.

It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability.

There are around 20+ companies in India which offer Motor insurance.  There are few names which are leader in Motor insurance.

 

How to make a Motor Claim

1 - If a vehicle meets with accident first call to public help services such as -

Police by calling at 100 in case of collusion / fire and hit and run case,

Ambulance service 102 / 108 in case of physical injury to any person due to your vehicle. 

Fire department help by calling 101 in case of fire to your vehicle. 

As responsible insured you are required to act your best to reduce loss by doing prompt actions such as trying to defuse fire / helping injured using first aid etc. This action are required from insured as per insurance contract and if insure does not full fill this duty at his best. Insurance company can deny claim. 

2 - Call to insurance company's claims department as soon as vehicle meets with accident. You can find call center number on policy document or company's website. 

Before you call to insurance company make 3 things ready for your reference.

     1. Driving licence number ( who ever drives vehicle)

     2. Vehicle registration details from RC book.

     3. Insurance details like policy number, name of insured.  

Have a brief description of accident ready in 2 to 3 lines. Also ask insurance customer care person that does Insurance company require police complain (FIR) for accident ?

 

If you have taken insurance from Dealer network like Maruti Insurance. Dealer can make claims intimation for your behalf after you have submitted claim request from signed by Policy holder. 

 3 - Register Police complaint - If your insurance company asks you to register a police complain.

1. Write an application to Police station In charge officer , Provide details about the accident, time , place, vehicle number, Chassis number, engine number and all relevant details so It will make easier of police to investigate the accident. 
2. Make two copy of application.
3. Meet with Inspector or Thana in charge with application. Inspector will ask you to submit application with some one in department.
4. Get a receiving stamp on the copy of application from the police officer and ask for General diary number. Remember if the police will not register a FIR at once. They will do it only after investigating crime scene. In that case to register your insurance claim GD number will be sufficient.
5. In case of vehicle theft, you will need a FIR copy GD number will not be enough for claim. (See step )

 4 -  Take your vehicle to Garage authorized by insurance company. If you are able to drive your self that is good or you may tow your vehicle to nearest service station by taking help from crane service. Remember to take a receipt from towing company. You will need it for claim towing charges from insurance company in original.

5.  Once your vehicle is reached to garage a surveyor will be assigned to settle claim by insurance company. Provide all relevant document to surveyor including photo copy of police report (if required).

 6.  Most of the insurance company allow cash less claim settlement for motor claim. But there are few like government company which will not provide cashless settlement for claim in different zone. So confirm with your insurance company about it.

 7.  Based on the surveyor's report garage will prepare a estimated cost of repair and you will need to pay for deduction amount INR 500 or 1000 depends on your vehicle size. Insurance company will pay 50% for plastic part , 100 % for metal and Glass (after considering depreciation), a fixed amount for Towing charges.

 8. In case of complete loss company will pay for the actual value of the vehicle and will take custody of the vehicle.

 9.  In case of theft company will wait for police confirmation report. Generally, police will give stolen vehicle confirmation only after 90 days.  Insurance company will release the claim amount based on Actual value of vehicle after confirmation is received from the police department.  

I hope with will be a help full information.

I have tried my best to provide as much as information. If you feel I have missed some information please put in comments.

 

Right Capacity Planning

Today, I am going to share my experience about Capacity Planning in any organization. 

Before we start this topic I would like you to understand what is Capacity planning. Below is standard definition from Wikipedia. 

Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, "design capacity" is the maximum amount of work that an organization is capable of completing in a given period, "effective capacity" is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, etc. The phrase is also used in business computing as a synonym for Capacity management. 

Recently I visited a Branded Salon in my neighborhood. I would like to take reference from my previous article Sharing a space in Business. This salon is also one the example of Sharing a Business Space. It is opened in a large supermarket. Due to this number of prospect are very high.

I visited this salon after 2 days of its opening. I found they were legging behind in capacity planning. The space they had acquired was not enough for customer in waiting as well as customer  are being served. 

Since they were aware that there will be a large walk ins , they did not put efforts to hire correct number of staff.  

Also I found that no ready brochure were available for customer to know what is being charged for what service.

No billing systems were up. Staff seemed not trained properly and were not ready for large number of walk ins. 

As a conclusion I understood that a firm should take care of following things when starting a new venture.

1. Determine Service Level Requirements - The first step in the capacity planning process is to categorize the work done by resources  

and to quantify users’ expectations for how that work gets done.

2.Analyze Current Capacity - of the system (process) must be analyzed to determine how it is meeting the needs of the users.

3.Planning for the future - Finally, using forecasts of future business activity, future system requirements are determined. Implementing the required changes in process will ensure that sufficient capacity will be available to maintain service levels, even as circumstances 

change in the future.

4. Training - Training is a vital part for success of any new venture. All resource should be well trained to cope up with any kind of situation. Training should not be one time. It should be continues process. 

I look forward for your opinions. 

Work from Home in an IT Company

Last week I requested my manager for allow me to work from home and company made all arrangement required to work from home.  I have mixed of experience from my first work from home incident.  I would like to share with you what are my observations about working from home in an IT company. 

Technology - Since work from home (WFH) is depended on technology in an IT Company.  You must a high speed internet connection to work if you are working in an online application. If you are working as a programmer normal internet connection will work in this case because most the unit testing can be done my programmer on Local host.  

If you are having a limited speed and you are required to work on a online application which requires high bandwidth, Work from home is waste of time in that case.

Motivation – WFH can boost motivation in your employee, because he or she can take care of child or family member while working from home. In actual term he or she will do more work then they perform while working form office premises.

Resource utilization – Company is able to save power and other utility expenditure while employee is working from Home.

Responsibility – It give them sense of responsibility and habit to work without being monitor by others. Also I make them ready to work from other location or client location while they are work from home. 

Cutting costs and raising revenue

We all know the expression, "He's penny-wise and pound-foolish," and we understand its meaning, even though for most of us, its origins are shrouded in the mists of time. The maxim refers to people who make foolish financial decisions. Could it refer to your Company, too?
 A little puttering on the Internet reveals that the source of the "pound- foolish" maxim is an old English fable about a man who was too cheap to have his horse reshoe when a shoe became loose. As a result, a rock became lodged between the loose shoe and the horse's hoof. First the horse became lame, then it stumbled and broke its leg, and in the end it had to be shot.
Thus, while the owner saved the price of the blacksmith's services, he lost the much greater value of the use of his horse. Penny-wise, but pound-foolish he truly was.
So what can loose horse shoes teach us about company’s finance? More than you might initially think—especially if the Managers in your firm don't understand the difference between cutting costs and raising revenue.

Budgeting

Every firm needs a written budget and should consult that budget periodically to make sure that expenses are within expected limits. Unfortunately, more often than not, firms don't have written budgets based on well-reasoned projections of what expenditures will be needed to operate the firm.
Consequently, when revenue is flat or declines for one or more accounting periods, here's what happens: Panic sets in, and because the projections were inaccurate, it sends the firm's employees  scrambling outside of the budget and into a cost-cutting frenzy, slashing spending on everything from pen pencils to technology upgrades.
And so when revenues or profit margins in a law firm decrease, the manager’s natural impulse is to attempt to reduce the various costs that go into providing a particular service, either directly or indirectly. But, like the hapless owner of the horse in the fable, firms that concentrate on reducing expenses rather than focusing on effective ways to increase revenue will find that, instead of riding high, they're walking unhappily—and sometimes sooner rather than later.

Leave Expenses Alone

Firms that really want to improve their profitability should be looking for ways to increase their revenues while keeping their expense structures unchanged—or at least growing as slowly as possible.  So your focus should be on Sales but not on the cutting cost to increase your bottom line.

Where you can boost Company’s Revenue ?

Realization - The first place you can look to gain additional revenue is in your realization rates—both billing realization rates and collection realization rates. You can almost always find additional time (and profits) by improving your billing realization, which you do by reducing the number of hours worked on a given matter but not billed to that matter. Improving your collection realization requires reducing the number of hours billed to a matter but not collected—either through write-downs of time recorded or write-offs of unpaid accounts.

Leverage and work for higher rates - A second place to look for additional revenue is through increasing personnel leverage. If, for example, you can hire an associate to do billable hourly work that you have been doing yourself, you can not only bill that person's time but also free up your time for other, higher-hourly rate work.

Alternative Billing - A third, and perhaps less obvious, option for adding revenue is through the implementation of alternative billing in tandem with increased use of technology. You should charge according to Geography and type of work.  You will then be guaranteed to make a greater profit on these files over the long term.
Plus, there are other benefits. When you can tell clients up front what they will be charged for the matter, before heading into the work, it increases their feeling of comfort with you. Not only that, but because you have quoted a fixed fee, you and your staff now have every incentive to look for new ways to use technology to perform the work with the same accuracy but in a more efficient way—further increasing the profit margin on the work.
This is a win-win for you, the client and the bottom line. 

Billing turnover - A final place to seek increased revenue is in your billing turnover rates. How long does it take for you to produce a bill once the work is done? The average billing turnover time—meaning the time work-in-progress is banked before a statement is sent to the client—is 60 to 70 days. If you can decrease that time, you will increase your billing turnover rate. You will also reduce the number of days before payment is received (which is, on average, 105 days), thereby increasing your payment turnover and increasing the speed with which revenue flows through the firm.

Sharing space in Business

Few days back an entrepreneur lady opened a cloth shop near to my home. This building is located on a corner and has access to two streets. Thus shop has two doors. For few days that lady struggled to attract few customer. Finally she had a brilliant idea of sharing space with some other vendor. So she rented a portion of shop to a Fruit Juice maker.

Since this is only fruit juice shop on the street, it has started to attract good number of customer. Because of that few customers are also walking in to cloth shop and lady is able to do decent sale.

If we analyze this scenario lady is now able to utilize space effectively.  Her shop looks full of material because of less space and she is able to earn some rent out of fruit shop as well.

One has to identify the right combination of business to share space so they can get effective results.

Retrospective Tax Proposals

Retrospective Tax Proposals  made by Government of  India in Finance Bill 2012 has led to controversy among the many entities which are to be affected by amendments.

Most visible case of Vadafone Hutch deal which had caused government to loose Rs. 110 Billions as Tax.
as noted by Hindu Newspaper, Section 9(1)(i) to clarify that an asset or a capital asset being any share or interest in a company registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. Thus the amendment is not only expressly classificatory but even expressly retrospective. This is perfectly legal by all judgements of Supreme Court.

FM has stated that several companies who have paid earlier have already asked for refund after Vodafone judgement and more may follow. This, in fact, would lead to much greater instability than the stable situation that the amendment will bring for all time to come.

Vodafone on 04/17/2012 threatened to drag the government of India to international arbitration over retrospective tax legislation under the bilateral investment treaty (BIT) between India and the Netherlands.

Retrospective Tax Proposals are not being done for first time in the world. They are in fact part of Law making process and refining law to Protect interest of a country.

Welcome

Welcome to Business thought blog. I am going to put my thoughts about various aspects for business. I am business analyst by profession. With your help I think we can make this blog a successful source for people who wants to understand a particular business lifecycle. Keep visiting for latest post.
Thanks
Rakesh