When your employees are family

All in kind!
Gujarat's model of employee benefits, as seen in the state's family-owned businesses, retains talent with a human touch, report Business Standard's Sohini Das and Vimukt Dave.

Savji Dholakia, owner of Hare Krishna Exports, is a dream employer for diamond polishers in Surat.

He is famous for doling out lavish bonuses to thousands of employees on Diwali. His best employees receive around Rs 4 lakh (Rs 400,00) as bonus, mainly in the form of cars.

Human resources experts point out the model is anything but scalable, but executives at HK Exports say this has worked in retaining talent and maintaining morale.

HK Exports employs nearly 8,000 people in its Mumbai and Surat operations, which process 40,000 carats of diamonds every month.

This practice is not uncommon among Gujarat's family-owned businesses.

The Rs 1,500 crore (Rs 15 billion) Rajkot-headquartered Balaji Wafers, led by Chandubhai Virani and his brothers, helps employees buy homes, with the wedding expenses of its women employees (almost 70% of its workers are women), during medical emergencies and funds the education of employees' children.

The much smaller Rs 100 crore (Rs 1 billion) Seth Brothers, which makes the purgative Kayam Churna, is also active in employee welfare schemes.

Dholakia's company spent around Rs 51 crore (Rs 510 million) this year on Diwali bonuses to 1,716 employees.

Around 400 flats and 1,260 cars were handed out as Diwali bonuses.

Last year, the company rewarded employees with 491 cars and 200 flats.

Dholakia had earlier said he believed charity begins at home. HK Exports also invests in community welfare schemes like hospitals in its hometown Surat.

Its founders want each of employee to have a house and a car. The flats come from the company's own housing scheme.

Any employee earning over Rs 30,000 a month receives a flat worth around Rs 20 lakhs (Rs 2 million) for the price of Rs 11 lakhs (Rs 1.1 million).

Once the flats are allotted, employees need to pay monthly installments (roughly Rs 11,000) after some years.

Dholakia treats his employees like his family; he actually takes his employees on a 15-day paid vacation with their families every year.

"Organisations are not families, they are teams. Treating them as families actually caps their growth. Putting loyalty over performance might backfire in the long run," points out Manish Sabharwal, chairman and co-founder of TeamLease Services.

"The diamond industry is a highly cyclical industry. Most small units lay off employees in bad times. In Dholakia's unit, the attrition level is very low among artisans," says a Surat-based diamantaire, who runs his own polishing unit.

The industry feels HK Exports attracts the best talent in India's diamond hub.

Rituparna Chakraborty, executive vice-president and co-founder, TeamLease Services, however, says the model is not scalable.

"Rewards are one thing, employee benefits are another. In most cases, there is a tendency to mix up the two," she says and adds if the model worked on a bigger scale it would have been adopted worldwide.

Keyur Virani, director, Balaji Wafers, feels his company can continue with its employee benefit schemes even as it expands.

"When we take someone in, we induct them into our value system. We inform them about family values, the way we aim to run the business. We feel the connect with employees will not severe even after expansion, as a new (employee) in Madhya Pradesh is inducted in the same way," he says.

Seth Brothers ensures the children of its employees receive a proper education. The company also helps in medical emergencies.

"If employees feel secure, they work better. They are not constantly looking out for options," says Deven Seth, managing director of Seth Brothers.