Flipkart’s Deferred Recruitment Draws Flak From IIM-A

Online retailer Flipkart’s decision to postpone joining dates for fresh recruits after final placements at various IIMs and IITs has drawn flak from various quarters, the latest from the Indian Institute of Management, Ahmedabad where placement committee chairperson Asha Kaul has shot off a strongly worded email to Flipkart CEO Binny Bansal and Chief People Officer Nitin Seth.

Terming the decision and a compensation offer of Rs 1.5 lakh as “utterly unacceptable,” Kaul also demanded a guarantee from the firm on taking in all the selected students. Earlier,Flipkart had stated that due to an “ongoing restructuring exercise”, it was deferring the joining date of management trainees to December instead of July. It also offered a joining bonus of Rs 1.5 lakh as compensation for the delay.

“With the need to service heavy educational loans that most of the students have taken, it stands to reason that the Flipkart’s decision of deferring joining by seven months puts a lot of personal finances (and by extension careers) in jeopardy and is bound to cause a lot of duress for the students and their families. The amount of 1.5 lakh offered as joining bonus hardly qualifies as compensation for seven months of forced unemployment,’ she said in the letter.

Flipkart had stated that due to an “ongoing restructuring exercise”, it was deferring the joining date of management trainees to December instead of July. It also offered a joining bonus of Rs 1.5 lakh as compensation for the delay.

Referring to the restructuring that Flipkart gave for the delay, the letter said the matter of campus hiring could have been handled much better with campuses forewarned well in advance and engaged as partners in this decision making. “Rude shocks due to unilateral decision making does little to help strengthen relationships with the campus,” she said pointing out that an email from Flipkart’s campus team had come as a shock to the institute.

“Most of the students had chosen Flipkart over other well reputed recruiters on campus because of the strength of the brand Flipkart. Your decision to defer the date of joining, comes as it does so close to the earlier promised date of July 2016, is sure to make this talent pool regret their well thought out decision,” the letter said.

“Talented students fresh out of campus, on the eve of starting successful careers, feel cheated out of multiple opportunities that the campus had to offer, through no fault of their own, just because they chose Flipkart,” it added.

Future engagement of Flipkart with B-school campuses is bound to get affected as a relationship based on mistrust and lack of transparency can never be mutually beneficial, it said.

All placement heads and placement committees of all colleges have decided to come forward “in support of our students and would like to have a common conference call with you so that we can find a more amicable solution, the letter added.

It then gave three options to Flipkart. These are an undertaking signed by the CEO guaranteeing that every one of these students will be absorbed when the date of joining is finalised no later than December. Either scaling down the period of deferment or ramping up the quantum of compensation (1.5 lakhs for a period of seven months is, to put it mildly, utterly unacceptable) to reflect x% of package. And finally, the payment of the compensation should commence on a monthly basis starting July and not as a lump sum amount as joining bonus or arrears.

The Institute also sought a speedy response from the company regarding scheduling a conference call in the next couple of days, where all the relevant stakeholders (Flipkart management, placement chairpersons of the campuses, Placecom representatives from the campuses, representatives from Flipkart new joinees) could engage to reach a mutually acceptable solution.

“We hope that working together, we can keep the matter from escalating to a wider audience. Our only objective is to protect the careers of our students,” the letter concluded.

Flipkart, however, maintained that while the company would take in all those selected, it was not in a position to increase the compensation. This was also not the first time that such a situation had arisen in campus recruitments. While it was among the bigger recruiters in the e commerce sector, several others in B-schools and engineering colleges have deferred or even withdrawn the oin ffers under the present circumstances.

Meanwhile, a placement committee member revealed that Flipkart had offered Rs 20 lakh plus annual package and the five-month delay in joining would mean a loss of almost Rs 10 lakh that cannot be compensated by a joining bonus of Rs 1.5 lakh.

The firm, in a blog post at its website sought to justify its decision and sought to assure the recruits that their interests would be protected.

“In the past few months, we’ve been working on restructuring our businesses to strike the right balance among key levers such as innovation, strategic execution, and operational excellence. The organizational restructuring involves the creation of new business units in some cases and mergers in other cases. For example, we integrated our engineering organization and created new units like the customer shopping experience group. This restructuring process is ongoing,” it said.

“As a part of this ongoing restructuring, the campus program will also go through a comprehensive overhaul to ensure that it is in line with our new business structure and that our campus recruits start working towards larger company goals from Day One,” it added.

About repayment issues regarding student loans, Flipkart said, “ We have taken this point into consideration while deferring the joining date to December 2016. Loan repayment starts a year after the end of studies or six months after the student gets a job, whichever is earlier (this is known as ‘moratorium period’ or ‘repayment holiday’). Candidates can seek an extension on this period by submitting their revised offer letters to the bank.”

It said the decision to defer joining for 6 months has been taken after due evaluation of all possibilities and keeping in mind the timelines to complete the organizational restructuring. “We are committed and absolutely confident of having all our trainees on board in December 2016.”