Making employees money-wise

Ganesh Chella still remembers the formidable Kabuliwallas or Pathans from his days in Cadbury's as a personnel officer in the '80s in Mumbai. These moneylenders would stand outside the factory gate on payday and grab the workers' money before it reached home. Indebtedness was rampant.

There was a migrant workforce, a first generation of workers who, out of necessity or profligacy or both, often became indebted-a theme portrayed poignantly in so many Bollywood movies of the '60s, '70s and '80s. Chella and his ilk neither had the brief nor did they do anything to mitigate the financial problems of workers then.

Things are no better today. There continues to be a large mass of firstgeneration workers, especially in new economy sectors like Business Process Outsourcing and Information Technology. Then, the culture of spending ensures that a lot of employees always have much of the month left at the end of their money.

Amit Tandon, 37, Head of Marketing, AGS Infotech, Mumbai Organised personal finance training for 400 service engineers and technicians from various centres at a workshop during the company's annual conference in 2009. Their average salaries were between Rs 5,000 and Rs 12,000 a month. THE OBJECTIVE "The employees have to be happy in their personal lives to be productive during work"

And the reckless use of credit cards to meet everyday expenses completes the vicious circle of indebtedness. But there is one big difference. Unlike in the past, HR departments are now increasingly becoming alive to the financial problems of their employees and recognising the need for training them in personal finance management. Says Chella, now CEO of Totus Consulting, a Chennaibased third-party HR consultancy boutique: "The problem of profligacy is very serious and the onus of counselling/teaching for sound financial management rests with the employer and not with the parents. The nuclear family has no control over its offspring."

Thanks to proactive HR departments of companies and marketing initiatives of finance consultancies like Bajaj Capital, Client Associates and Coimbatore-based Finerva Financial Solutions, among others, till date thousands of employees across companies have received training in financial literacy and become aware of their financial goals.

Bajaj Capital has a client list of nearly 200 companies and includes biggies like Indian Oil Corporation and Samsung India Electronics. Client Associates puts the number of such clients at eight but refuses to divulge any of the names for reasons of confidentiality.

"Of late, the importance attached to financial literacy is increasing. Not only are our old clients calling us again and again, but newer ones are also taking a lot of interest in these programmes," says Anil Chopra, Group CEO, Bajaj Capital. S. Velavan, Senior Design Engineer at Coimbatore-based Nimbeon Inter Technologies, who received such training, vouches for its efficacy: "I am quite happy here and don't want to jump jobs for the sake of a few thousand rupees. I know I have to plan well with my current salary and with my family growing. Such programmes really help."

Prathiba Thiagarajan, an employee who had been part of an earlier personal training programme at Cognizant and is currently located in Arkansas, US, recalls, "When my parents came to me for a personal loan to fulfil a long-term vision, I was glad to help-but I could not help thinking that they could have planned better. I also know that my child may not be as generous to me later-I have now set my financial goals."

In fact, a recent study of the salaried classes in the country by Finerva Financial Solutions underscores the lack of financial literacy across all sections of employees. The survey found, among other things, that even though 60 per cent of the managers rated themselves as having good financial management skills, half of those managers worried about managing their money and 90 per cent of them had not implemented their retirement plans!

G. Akiladevi, 26, Team Leader, Nimbeon Inter Technologies, Coimbatore STINT WITH COMPANY: 6 years CURRENT SALARY: Rs 4.5 lakh per annum INVESTMENT STYLE BEFORET RAINING: Spent 40% of salary and kept the rest in a savings account. AFTER TRAINING: Now knows how to set long-term and near-term goals, save effectively for those goals and make investments accordingly.

"The findings helped us know what we suspected-that despite the best intentions, managers did not invest the time to learn and manage their finances properly, and that many equated tax planning with financial management," says Jawahar Karthikeyan, a Certified Financial Consultant and Director at Finerva. Based on the survey findings, Finerva now conducts "Train the Trainer" programmes and corporate training programmes on personal financial planning across companies and across all sections.

It teaches the tools to create wealth-the basics of cash flow; balancing risks and return-and creating a surplus from one's budget to meet goals, whether the income is Rs 5,000 or Rs 50,000 per month. "Quite often people come to us saying they don't have spare cash-we help them identify the waste and reroute the 'saved' money for growth," Karthikeyan says.

Increasingly, companies are extending the training programmes to all their employees. "We are extending the programme to all our workers and executives. But we'll know the results only six months down the line," says W.S. Satchidanandam, President, TVS Rubber at Madurai. D. Rajkumar, Regional General Manager of The Hindu at Coimbatore, initially organised a financial training programme for the circulation department after hearing the team grumble about tax cuts, but is now extending it to all the staff. "Many of them don't think beyond LIC and bank fixed deposits," he says.

But what's in it really for companies and consultancies like Bajaj Capital that hold such programmes free of cost? "We do this as a marketing initiative and employees come back to us for investment in select products. Our income is by way of brokerages and commissions from those companies. We don't charge the retail customer anything," says Chopra of Bajaj Capital.

Finerva restricts itself to pure training and charges a fee from the company. As for the companies, the rationale is best explained by Amit Tandon, Head of Marketing, AGS Infotech, a Mumbaibased hardware and automated solutions supplier, primarily of ATMs, who organised a personal finance workshop for his engineers (see opening page) last year: "The employees have to be happy in their personal lives to be productive during work," he says.

Indeed, the link between personal financial wellness and job productivity is well-documented in a 1996 study of American workers by Virginia Tech researchers E. Thomas Garman, Irene E. Leech and John E. Grable, which showed that there are substantial costs to employers due to the stresses associated with poor personal financial behaviours of employees.

On the positive side, the study calculated corporate returns at three times the investment that went into the training. That should be enough incentive for other Indian companies to invest in the financial literacy of their employees.