Mathew Job, CEO, of Crompton Greaves Consumer Electricals Limited talks about the company’s post-demerger challenges, investments in employer branding and training programs, and the importance of attracting and retaining young talent.
Could you give us an overview of Crompton Greaves Consumer Electricals Ltd. in terms of business and workforce growth during and after the demerger?
This company was set up about seven years ago. It was previously part of Crompton Greaves limited, and the demerger took place in October 2015. This company was a small consumer business, in a predominantly B2 B-focused organization that was strong in technology and engineering. When it demerged, it fully became a consumer business.
I joined during the demerger. Our main concern was – how to maintain the drive and also take the company to the next level. The company was a reasonably good performer. It had a good relationship with the business community, especially the retailers and the channel partners. Overall, it had a lot of positives.
We had a lot of new competitors. They were agile and aggressive with their market actions. They were quite different from traditional competitors the company had faced and one of the challenges this company faced being part of a privately large B2B enterprise was that many of the remaining parts of the business were not doing very well at Crompton Greaves Limited. The consumer business had been under-invested for many years before the demerger.
Therefore, while the company had a strong connect with the older age group, the brand did not have a strong relationship with people in the 25–30 age range. The profile of the consumer was changing. As a result, I believe that some of the more recent and nimble competitors had been spending a lot of money in building the brand in order to engage with the younger age group. That was one challenge.
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The second is in terms of capabilities. A lot of expertise in this area was needed in order to understand consumers. And because it was an engineering and technology company, the thinking was that if you made a better technology fan or better technology lights, you could find a way to market them. But we don’t really design our goods and services keeping consumers in mind.
While we knew that we had to bring new capabilities and build new skills, we still ensured that 99.5% of the initial employee base came from the erstwhile CG. We believed in keeping the skills that got us there. We were very clear that our preferred course of action was to upskill existing employees. Over time, we have worked to preserve the strong nucleus that the organization has while building specific capabilities from outside such as consumer understanding.
The other areas we tried to build around were innovation and R&D. Because of the demerger, many of the essential capabilities we used to get from the erstwhile CG’s engineering and technology went away, so we had to rebuild that anew.
The dangers of going through such a massive transformation in terms of new company and ownership are that you can wind up with a business that lacks a strong anchor. So what we have tried to do is, maintain the anchor of the company on a strong foundation and then build over the years.
“For two years, we hardly experienced any attrition, which is supported by the fact that we did not fire people. So for a long period of time, we had negligible attrition. We may have had a slightly heightened attrition of more than 20 percent over the past year. But that will stabilize soon.”
What was the initial reaction of the employees?
There was a sense of insecurity among people because the process took some time. The employees were aware that the business would be going through some kind of transition. One of the most important things was that the new leadership made it clear that we had no plans to make any significant changes other than to build something on top. Only three of us were recruited at the time of this demerger. Shantanu Khosla (MD, CGCEL), Sandeep Batra, and I. Sandeep recently left the company.
This helped us a lot because, in the initial period, we had a lot of stability. We hardly lost any people. One of the strengths of this company, even earlier as well, was that people used to work for many years at Compton, even Crompton Greaves Limited. And that’s something we wanted to maintain. Even with our new promoters, the board was very clear that we are building the company for the long term.
What was the first initial set of investments you had to make in keeping the house in order?
We decided there are five areas which are very important in the early days. One was the brand since the Crompton name was our strongest asset. The brand was under-invested for at least 10 years prior to the merger. As a result, the connect of the brand with the younger people was a big question. From day one, therefore, we started investing more in the brand.
Our advertising over the last six or seven years, it’s always about a young couple in the early stages of their married life and problems they face, and how Crompton can make their home better. That’s one change, positioning Crompton in such a way that is more appealing to younger age groups.
The second area was innovation. We are in the top five players and control 70% of the market share. With low level of consumer involvement, they don’t really care what kind of fan they are buying. Creating a strong consumer franchise is one of the things we truly need to do, and that can only be done by designing goods and services that the customer perceives as unique and relevant.
The third thing is how to make our products and services accessible. It could be online or offline. Earlier, this was a wholesale-driven model.
And fourth is around general operational excellence, how we build an operationally excellent company while eliminating several areas where there is wastage.
What kind of investments have you made in your company from an employee perspective?
Identifying the capability gaps that are around innovation, consumer understanding, and new go-to-market required the identification of four or five critical areas, after which a clear strategy was developed. First, you need to hire people with the right skill sets. The biggest investment was in tailor-made training programs to upskill existing employees. 20% of these programs are classroom-based; the remaining 70 to 80% have to be on-the-job training.
However, we also made a significant investment in ongoing training. Right now I’m currently receiving training in multiple areas. For example, I just attended the Harvard Business School Advanced Management Program.
At present, 75% of all decisions, in terms of purchasing a fan or lights, are actually influenced digitally. And three to four years ago, this figure was barely half as high. The training of employees will, therefore, continue to receive significant investment.
What was the attrition before and how is it now?
Immediately after the pandemic, there was a period when attrition was very low, especially in the sales department, where attrition decreased to 20%. For two years, we hardly experienced any attrition, which is supported by the fact that we did not fire people. So for a long period of time, we had negligible attrition. We may have had a slightly heightened attrition of more than 20% over the past year. But that will stabilize soon.
In terms of all the policy-level changes, new schemes being implemented, and new areas of growth identified, how do you measure the success?
There are many KPIs, for example, one of the things we track in R&D is what is the percentage of sales that comes from products launched in the last three years. Today, more than 50% of the company’s sales come from those products. It was maybe half of that, five years ago.
We have multiple things like employee engagement and some numbers around training like the percentage of people that meet the required levels of proficiency. Then there are more financial ones like customer satisfaction, product availability, etc.
“In the past, failure was perceived negatively. We are trying to change that because if you really want people to innovate, then you need to give them the opportunity to fail. If not, you’re not trying hard enough. So that’s one of the changes in the culture we’re trying to make.”
So there are typically four kinds of metrics: customer, financials, process, and people. We have targets for each of them. There’s a five-year plan and an annual plan. The metrics are coloured depending on how we are doing in each of them. For example, we had this whole target of driving premiumization on fans. We set a target for five years to move premium contributions from 7% to 20%. But we managed to achieve it in three years, then we had higher targets going forward.
You mentioned how the purchasing power of people has changed over the years. So from the talent perspective, attracting the same age group or the younger workforce, what have been the challenges at Crompton’s side? How has brand penetration happened in this demography?
There is a clear realization that the younger generation has a different set of outlooks. They desire the ability to accomplish things and more flexible working hours. For example, work from home was forced on us. It was never a thing we planned. But surprisingly, everything went well during this period and we never faced any significant issues.
In fact, 10-15 days before the government announced the first lockdown, we had decided to move people home for their safety. It gave us 15 days to give them adequate IT support. Even today, on average, people are still working from home at least one day every week. They can pick a day or in some cases even more. We have also adapted newer working practices.
The second area is innovation, which we believe will help us attract and retain younger people because they want to do something different. In the past, failure was perceived negatively. We are trying to change that because if you really want people to innovate, then you need to give them the opportunity to fail. If not, you’re not trying hard enough. So that’s one of the changes in the culture we’re trying to make.
Also, with younger people, it is much easier to get them to take risks. We tried to recruit a lot more people from the management trainee level, which was not there before.
Of course, that doesn’t mean we don’t value experience, we just need the right mix. If I look at my own team, when I joined the company, most of the people were in their 50s or so. Today, we have people all the way from the late 30s to 50s. That’s happened at every level in the company. If I look at the next level of leadership, the age will be much lower and we want to get progressively younger.
That also means I’m promoting people faster and they are able to get faster growth. We know that if you don’t have that generation in the company, we will not be able to target them as consumers.
Increasing diversity in the company is also one of the agendas that we are working on actively. It’s traditionally been pretty much an all-male organization. We truly feel that the organization would have much better financial performance if we genuinely bring more diversity, and we haven’t traditionally been strong in that segment. Therefore, it’s going to take time. More women need to be hired (we have less than 10% right now), but we also need to give them the opportunity to grow to senior positions.
Also read: How Do Companies Recruit and Retain Valued Employees in an Ever-shrinking Talent Pool?
In one of our conversations with an edtech major last year, the CHRO we spoke to mentioned having a seat on the board. Given the fact that HR has become a crucial function in any organization, what are your thoughts on having a CHRO on the board?
The biggest differentiator a company can have in the future, even today, is the quality of the talent they have. There are so many examples when we have had a significant impact, because of hiring the right capability in the right place. You have to raise the level of the entire company, not just one or two people. To me, HR is at the core of business strategy, because otherwise who’s going to implement the strategy? We can say ‘I want to build an innovative organization’ this calls for having employees with the right skill sets. I would put it at the highest level of the organization.
About the author: Mathew joined the company in September 2015 and in his 5-year stint as the CEO of CGCEL, his role has been instrumental in transforming the company into one of the top performers in the industry with industry-leading profitability.
Registered name of the company & location: Name – Crompton Greaves Consumer Electricals Ltd., Mumbai
Year of Incorporation: 2015
Number of employees: 4500+ (Direct + lndirect)
Name of the key execs: Shantanu Khosla, Mathew Job
Business line: Consumer Electricals
Key HR differentiating factors: Culture (Empowerment & development), and Innovation