In an interview to Indiaretailing Bureau, Flipkart completely denied a report carried by The Economic Times alleging the company was laying off 800 employees.
Flipkart’s Chief Administrative Officer, Nitin Seth told Indiaretailing Bureau: “We completely and unequivocally deny any such move from Flipkart. This is completely false and baseless. We can confirm to you that there are no plans for any layoffs in the coming months. Any speculations about ”continuing issues related to HR” is therefore completely unfounded and purely speculative.”
“Maintaining a high performance bar is core to our culture. As part of performance assessment process, we will have people meet or exceed expectations and some who do not meet expectation. In such cases, in interest of employees and company the best option is to charter their career outside the company where their skills can be better utilized. This is as per industry practices,” he added.
While Flipkart denies laying off employees, the exodus of management-level executivesis something that can’t be overlooked. Over the last one years, e-commerce players including Snapdeal, Jabong, Paytm, Flipkart, among others have all witnessed employee attrition, at all levels.
For instance, at least six senior executives have quit Flipkart over the past few months. Among the recent departures were Lalit Sarna and Sunil Gopinath, who were counted among the top talent in the company. Sarna headed the Transactions & Payments Business, while Gopinath was Senior Director Product & User Experience Design.
The duo had joined the company just over a year ago.
Reacting to this, Seth told Indiaretailing Bureau: ” There have been some exits owing to various reasons and they are part of journey of all organizations. We have the best of industry talent across all levels starting from top. It is a good mix of global and home grown team with one common purpose, to transform commerce in India. If there is a team in India, that can deliver on this vision, it is this team.”
Along with employees attrition and major rejig, continuous valuation markdowns has also remained a headline news for Flipkart this year. In the last few months, company’s valuation has seen multiple markdowns. For instance in July, Global asset manager T. Rowe Price Group Inc. reduced the value of its stake in Flipkart by a fifth, its second cut in four months. That valued Flipkart at $10.3 billion. The firm had earlier cut the value of its stake in Flipkart by 15 per cent in April. The most recent of all was Morgan Stanley that pegged Flipkart’s valuation at $9 billion.
When asked whether valuation markdowns were hurting the company and forcing personnel overhauls in a bid to move towards superior output levels Seth said, “Valuation reset happens when you do a fresh round of financing and we have not done any financing round since the last one. Having said that, we believe in focusing on execution and keep our heads down on serving our customer rather than thinking about valuations.”
Flipkart is not the only organization where a top level exodus has been happening for some tome. At Snapdeal, Anand Chandrasekaran, former chief product officer, quit the organisation in May this year to pursue entrepreneurial interests. Chandrasekaran follows Rajeev Singh, Snapdeal’s Former Associate Director of Market Development, who quit the organisation in April this year to join KartRocket, an e-commerce platform enabler, as its Vice President of Seller Ecosystem.
Though employee movement is common to any business, experts believe the pace at which it’s happening in the e-commerce space indicates challenges related to the organisational structure, expectations from employees, young leadership and lack of robust strategies.
“The current e-commerce scenario depicts a situation wherein the middle management is much more experienced than the top management, which may generate heat on some issues within the organisation,” CEO, Beyond Talent Management Pvt Ltd, Barkat Charania explains.
“Particularly in e-commerce, it is challenging to get the right person with required skills set at the right time. The industry needs professionals who are process-oriented and also have an entrepreneurial overview, people who are strategists and yet should be willing to get their hands dirty,” he notes.
The worrying across-the-board exits indicate that e-commerce firms should consider restructuring their operations in order to focus on business fundamentals, where discount-driven growth and GMVs as profit metrics will no longer be an option.
This is crucial, especially at a time when venture capitalists have begun asking questions on business metrics and profitability and have started controlling big-ticket investments from the beginning of 2016.