Emerging HR Practices

Study Group A9(IMIS) Debarati Ray Tapabrata Banerjee Sritam Kumar Dash

Kumar Mangalam Birla is the chairman of Aditya Birla who is son of A.V.Birla.

K.M.Birla took responsibility of the business having total revenue of INR 15,000 crores with assets of INR 16,000 crores. It had a strength of 75,000employees and 600,000 shareholders.

The longitudinal case study provides a snapshot of the dynamic and turbulent nature of the new liberalized Indian economic environment and how an organization such as Aditya Birla Group needed to brace itself from competition through innovative HR practices.

This article analyzes a longitudinal case of organizational redesign and the emerging role of HRM during this redesign of Aditya Birla Group, the third largest diversified business group in India, that grew from US$1.5 billion in 1995 to US$7.59 billion in 2006.

Having taken over the business K.M.Birla decided to consolidate entire group’s companies under one umbrella of the “Aditya birla group”.

Many critics came out as “K.M.Birla would be unable to manage the group successfully”

When K.M.Birla was criticized as a soft and shy person. who lacked the business expertise and assertiveness of his father A.V.Birla.

An unapproachable management style and misplaced priorities resulted into investors started selling off their shares .In 1996 the market value of group’s four largest companies Grasim ,Indian rayon ,hindalco & indo gulf fertilizer suddenly decreased by $1billion or 37%.

So K.M.Birla took several initiatives to prove his critics wrong.

He introduced a retirement policy , on the basis of which around 325 senior were there early 60s,had quit the organization in the next five years .subsequently about 400 young employees replaced them.

Meanwhile ,answering the critics he said, "people in the group about twice my age when I took over as chairman. I had great respect for them personally, but I also feel the need for change”.

He launched for the first time a corporate identity that would serve a corporate logo. The group selected the rising sun as the logo, which signified optimism and served as a unification symbol for the group.

K.M.Birla said, “The new corporate logo helped in bringing various companies of the group together. This helped the organization to reenergize and get started to the path of change”.

K.M.Birla also changed the group’s policy in house recruitment. He also made changes in group’s HR system. He hired professionals from other companies into his management team.

The partha system of daily financial reporting which focused mainly on production was replaced with an “Economic value added model”. This model focuses on the aspects of profitability, asset productivity and growth.

K.M.Birla also established aditya birla management corporation limited, the strategic decision making for ensuring the best practices across the group companies.

K.M.Birla decided to reduce the group’s dependence on fiber based business where its market share was low. Instead he decided to concentrate on non-ferrous metals as there was less competition and hindalco already had a big presence in the aluminum sector

K.M.Birla introduced a 360 degree feedback program in 1999 that permitted managers to raise questions over his leadership style, managerial ability and also personal traits but he could not define what he expected from his employees.

After the feedback, he issued each senior manager a six page letter mentioning the areas of improvement and his expectations.

In 1999 K.M.Birla launched the Aditya Birla scholarship to promote excellence among students community to cultivate the leaders of tomorrow.

He said, "cultivating a new generation of managers and cultivating a participative culture are keys to the increasingly energetic, people centered, and performance focused culture we aspire for”.

He also launched Aditya Birla awards in 1999 where team achievements recognized every year .

Birla had also implemented the organizational health survey, which measured the “Happiness at work” index. This was carried out to track the employees satisfaction.

K.M.Birla also brought in some managerial changes in the group. Before K.M.Birla took the chairmanship, the hierarchy in the group was determined by seniority instead of merit. He instituted a performance appraisal system. He decided to implement performance management systems, reviwed compensations and accentuated on training to bring meritocracy.

He personally led the recruitment program from business schools.

He also brought about changes in reporting system being followed at the group. The top 20 executives of the group, who had greater responsibilities in the group, could report directly to K.M.Birla, thereby giving them complete freedom to run their businesses and same holding the more accountable for their performance.

This case study explained how an emerging Indian MNC redesigned itself within a span of 10 years through its HR function to keep up with the accelerating pace of change in the external and internal environments.

Within a hypercompetitive and turbulent environment, HR itself demanded that the organization develop new capabilities aligned to the organization’s business strategy.

This article elaborated on some of the peculiarities and defining characteristics of HR practices unique to India and some of the main external and internal factors that have shaped the attitudes, work systems, and strategic and HR skills of Indian organisation in the context of liberalised Indian environment.

COMPANY: HINDALCO Everlast aluminium roofing

sheetsFreshwrapp aluminium foil

Freshpakk semi-rigid containers

Permashield waterproofing Aluminium foil

Aura alloy wheelsHindalco extrusions

COMPANY: HINDALCO

Birla Copper

Birla Gold

Birla Silver

COMPANY: ADITYA BIRLA NUVO

Birla Carbon

COMPANY: GRASIMBirla Super

UltraTech Cement (formerly Birla Plus)

Birla Ready MixBirla White

COMPANY: ULTRATECH UltraTech cement

COMPANY: GRASIM

Birla Cellulose

COMPANY: INDO GULF

Birla Shaktiman Urea

COMPANY: HINDALCO

Birla Balwan

COMPANY: ADITYA BIRLA NUVOLinen ClubPyroguardRay One Kolorone

COMPANY: GRASIMIce Touch

UncrushablesPurista

Clean FabCOMPANY: THAI ACRYLIC FIBRE

Texlan

COMPANY: ADITYA BIRLA NUVO

Louis Philippe

Van Heusen

Allen Solly

Peter England

Esprit

COMPANY: BIRLA NGK INSULATORS PVT. LTD.

Aditya Birla Insulators

COMPANY: ADITYA BIRLA CHEMICALS (THAILAND) LTD.

Polyphos® Epotec

Birlasulf-SSBirlasulf-SM Birlasulf 35

COMPANY: THAI PEROXIDE CO. LTD. EcareEncareAqua XOCAREBirloxHerlisil

key products and brands

capacities

country

PSI Data Systems Ltd. (subsidiary of Aditya Birla Nuvo Ltd.)

IT solutions (banking, finance and insurance)

India

key products and brands

capacities

country

Aditya Birla Minacs Worldwide Limited

(subsidiary of Aditya Birla Nuvo Ltd.)BPO / ITES 9,089

seatsIndia

COMPANY: IDEA CELLULAR LTD.

Idea

COMPANY: ADITYA BIRLA RETAIL LIMITED

more.