4Ps of Employer Due Diligence

In M&A, “Due Diligence” is an important, in fact, the most important component. It often raises ‘red flags’ that can significantly alter the attractiveness of the deal or marriage as you could term it

In a similar breath, while changing jobs, do you do a “Due Diligence” on your prospective employer- as changing jobs is nothing short of a marriage. It could often throw up facts about the company which can shake you if you join unaware. Thus through due dligence , you ensure that there are no regrets for a lifetime

What could be those 4 factors that you must check?

Profile

What exactly would be your typical day at work there? What are opportunities to learn?

Are people generally satisfied or frustrated with the work? Let’s say, the fact that your employer is an Investment Bank may hide the fact that the work is completely back-end. And thus, it may be out of sync with your personality.

How important is your profile in their overall scheme of things? For example, after a multi-billion dollar M&A deal, which will take time to digest, the M&A function in a company may be muted for some time. What will then be there for you to expand the vistas of your horizon? So, would it be a good department to join?

Say you are joining a tax firm. Does the firm have more of compliance work or advisory?

Will the profile change periodically so that you can become a more versatile professional?

People

The promoter, boss, colleagues.

Corporate governance matters a lot. Imagine joining an MNC which has a stellar reputation globally as compared to a homegrown promoter who recently defaulted on bank loans. This will also determine aspects like payment of salaries on time

In Covid-19 times, you have seen the question of job security coming in the forefront and thus the promoter philosophy, Imagine how much is the reputation at stake for a bunch of college batch mates who had started a venture, recently raised one round of funding and hired you. How tough will it be for them to lay you off when the next round of funding doesn’t happen?

Is the firm/company too hierarchical? Is it top-heavy? Or is it flat? This will determine the pace of your growth?

For learning, for growth – if you can get some sense of who is your likely Boss? Because a bad boss in a very good company can make life hell for you. And you cannot even crib in the outside world because the company is so good. Remember that often people join companies, leave bosses.

Is there concentration of people from a particular community in the top management or is it completely cosmopolitan? (A mandatory check for IT companies). Good for you if you also belong to that community, else it’s a red flag.

Are colleagues, in general, very ambitious as it happens in a typical FMCG company. In that case, it will be an overly competitive workplace. Because the pyramid shape in the hierarchy means only a few will rise. Are you prepared for that intense competition?

Pay Package?

What is the salary you are being offered? Is it in alignment with the general salaries there? Else once you join, you may face a lot of hostility from your peers, if you earn even a couple of lacs more? If you earn lower, you will feel short-changed.

Often companies pay different salaries to different people based on whether you are a CA or an MBA from a Tier 3 college or an MBA from JBIMS or an MBA from IIM. Sometimes you earn less because you are a lateral hire and someone who is a campus hire/ part of a special leadership program, earns more. People working in adjacent cubicles and drawing different salaries becomes a great content of discontent.

What have been the average CAGR in Salary that people have been able to notch up? Is it determined by Pay Commissions – just an outcome of time spent in the organisation?

Are there differential rewards for top-performers? Are galloping horses and sleepy cows getting the same growth? Good for you if you belong to the latter category and extremely frustrating if you are in the former category (because you would eventually be cross subsidising the latter)

Policies

Does the company have a very rigid transfer policy? Say mandatory transfers in a PSU, which you cannot avoid at any cost. Are there cases of Punishment Postings, say in remote locations?

Is entry always on the basis of strict interviews or is nepotism also prevalent. The ones entering through the latter route often become eyesores

Are there policies on work-life balance? Do they offer work-from-home occasionally?

What is their leaves policy? I recently came to know about a company which has a 6 day working week. And offers 12 leaves in total in a year and that too can be taken only one/two together. You cannot leave office even during lunch hours and if you do, you have swipe out & in and serve the additional time on the same day

Do they have sufficient medical insurance?

Do they have policies to advance your higher education, say sponsoring your CPA?

What is their rating on Glassdoor?