Today’s Indian BusinessScene

What we will discuss1. Overview of the Business Climate and context past and

present

2. Changes in the World of Work & Impact on IndianOrganizations

3. India’s problems in achieving Global Standards

4. Changing IR Scene in India

6. A Case Study

7. Areas to be considered as you consider business in India

8. Q and A (but please ask any time!

Business Climate

India's place in the Global Economy• India is

– a country of potential.– Cocked slingshot– Target within range of Indian Capability

• India has– Stable economy– Continued economic growth– Governmental regulations changes– FDI enhancements– NRI outreach– Reversal/slowing down of brain drain and welcome

home to many– Leveraged IT/ITES Industry strength around the

world

India in the Global Market

• In general India public and/or privatesectors have:– Started work on infrastructure– Leveraged their IT capability to take the

lead in the global market in this industry– Expanded the reach of their already global

Indian companies– Built presence in Pharmaceutical, Medical,

Bio Chemical, Cement, Financial, Rubber,Retail, Cosmetic, Design, Entertainment,Garment and food industries as well as IT.

India in the Global Market

• India’s Strengths:– Population– Ability to adapt and move beyond obstacles and

barriers with seemingly graceful and instinctiveresponses

– Rising from the inside out on the shoulders and inthe minds of the Indian people

• pushing the limits of individual contributions and quietlybut methodically leveraging physical and financial globalpresence

• India’s Goal– secure the future that has been thousands of

years in the making.

College Graduates andEntrepreneurs• Graduates still emerging in significant numbers

– not all graduate with the perquisite skills to fillprojected career and job opportunities

• The education system in India is– aggressively reaching out to business for

advice and support– business is proactively moving into the realm

of education• establishing Academies as part of their

corporate structure• by giving time and energy to nearby

Universities and Colleges• building the Vocational Technical Sector of

the education system that had notpreviously been strong.

• There is still MUCH to do before thefuture is secure– Accomplished without government

intervention or mandate– It is in the hands of the business

leaders and progressiveacademicians

– It operates and even thrives aroundextremes

HOWEVER……

An Economy in Transition

• Predicted to change shape by 2025• From To

Spawned in the development and growthof the IT and ITES Service Industry

Changes in theWorld of Work

What Changed Workplace of 21st Century

1. GLOBALIZATION

2. Information Revolution/Internet

3. New technology

4. HRM Philosophy:

Psychological Contract

The Globalizationandits

Impact on Business

Parts

PartsParts

Assembly

Advertising Design

Sales

Today’s Business Realities

A Global Web

Sales

Parts

Sales

Critical issues in shifts from Capital to Knowledge Economy© Debi S. Saini, 2004

Characteristics of Globalization•Chaotic Competition•Radical change•Opportunities•Strategic alliances•Complexity/Uncertainty•Flexibility•Customer focus•Saliency of People Mgt Issues

In India theseDevelopments

Impact all sectorsincluding

Manufacturing

“ Hanging on for dear life” : Survival in the face of turbulent change

The intensity of thiswill be far greater

in the near term as the velocity ofchange is increasing

Indian companiesstriving to be

Global Leadersin this exciting

Business Environment

Indian Business is adjusting its sails and settingsites on new horizons

Every journey to corporatetransformation requires takinga strategic step in the desired

directionA journey of 100 miles begins

with a single step

Indian businesses are taking giant steps

The problems IndiaFaces inAchieving GlobalStandards:Challenges for HR

Problems in Achieving Global Standards

1. Acceptance of how things are which inhibits growthtoward world class/professional/vision

2. Hierarchical mindset

3. Lack of process sensitivity

4. Sense of collective paralysisproblems too big and toomany

5. No frame of reference for creating “customer WOW”

Problems in Achieving Global Standards continued…

6. Attitude toward time

7. Slow acceptance of change : rigid beliefsand personal values

8. Different approach toward safety

9. Slow internalization of Work ethic

10. Difficulty in differentiating between excellence &mediocrity

Changing IRSceneat Global &National LevelsReflectingNew Thinking &Mindsets

India isgoverned

by a Constitutionthat foresaw awelfare state

and espousesthe values of

tradeunionism

andsocial justice

1. BUT the role is Changing

• Welfare state: inefficient

• Government as facilitator

• Export-oriented production (SEZs)

• Changed labour policies of states

2. Global Trends – India Trends

1. Multilateral IR: consumer/public/gender issues

2. New issues:

––Customer Creation/sustenance

––Protecting environment

––Gender issues

––Safety promotion

––Child labour abolition

3. Media’s role in new issues

Building Cooperation with Unions

Figure 16.6Source: The Conference Board of Canada.

3. Emphasis on Performance-relatedPay

• Flat organization --Flexiblepay

• Cost saving: a big concern

• Competencies development

• Knowledge pay in high-tech.industries

4. Changed Thinking of State

• Changed Govt. thinking--July 1991 Economic Policy--2nd NCL: July 2002

• Rationalize Labour Law

• Social justice to market & trickle down--Vigorous attack on welfare state ideology

5. The NEW HRM

New Trends in India: IR practicesrooted in HR Strategy

• Identify & enforce behavior

• Strive for Competitive advantage

• Focus on new interventions

• HRM & IR merged to produce positive energy

• HR strategy is the single most importantConsultancy Area

Strategic HRMExpected toDeliverCompetitiveAdvantageAndPerformance

Global BP Influences on

HR Practice and ideology in India

Smallwood

Ulrich

Brockbank

Lev

•Empowerment/Involvement

•Learning organization

•QWL, welfare: justice

•Employee respect,fairness, pride,camaraderie

•Diversity management

Some Soft Strategic HRM Themes

• The most valuable intangible asset forHindustan Lever Limited are its brands

• In large degree, market value of Dr.Reddy’s is a factor of “Quality of theirknowledge base --Investment in R&D–Leadership”

Dabur has market cap. of nearly 67 timesit’s net worth --With same book value DalmiaCement’s market capitalization is 0.65 times

Influence of “ Intangibles” on Indian Companies

SomeCompaniesThatPractice“ Soft”HRStrategies

Classic Strips (Mfg.): Come Out of Control Mindset214 workers including contract workers - Most are blue-collargrowth from 4 workers 25 years ago

44 acre campus in Vasai, Mumbai grown from 10x5 ft. space 25years ago

Main motto “ dignity at work.”--Believes in: “ valuing every individual, giving people their due,

freedom, respect, opportunity backed by lots of training.”

Won Safety & Environment 2003 award (SIGA given to 5 cos. worldwide.)

Employee spends 2 ½ hrs every month on training (kaizen)

--Co. has a library with trade journals, magazines and books--Most employees are with the Company for the last 15-20 yrs--Women make 1/3rd of the workforce--It includes handicapped people--Proactive diversity policy--The Company shares with employees a %age of its annual profits

Mahindra & Mahindra• Focus on HR

– Hired a Yale University-educated president of HR– He was earlier a CEO for 2 Tata Group companies– Heads 150 HR manager

• Is partner in building Company Strategy– Responsibilities include CSR

• Business Strategy aimed to give competitiveadvantage:--Talent management--Creating synergy--Creating a culture of integration--Mapping--Succession planning--Developing a global mind-set.” (Grossman, 2006).

Prudential Process Mgt. Services (PPMS)

• Company with 1,200 employees--Serves Prudential UK’sPresident said that if HR fails to live up to expectation, it would bedisastrous to their company.

• Has reduced attrition to 20 % (Industry 45%)• Strategy comprises:

--Competes on its culture and not on compensation-- Family (friends, boyfriends, girlfriends) encouraged to visit workplace

--Rapidly enhances their skills--Offers them a conducive environment; makes them stick

• Sponsors continuing education--After 18 months, employees are eligible for MBA programs--Specially tailored with top-rated Indian business schools--1/2 tuition fee paid by PPMS

Susken Communication Technologies, Bangalore• Pride

--Work culture that exemplifies Co. Values upholds them

• Inspiring vision: “ unleashing India’s creativity.”

• It is a situation of complete trust and equality:--“ No-monitoring policy” leads to transparency, freedom from fear--No attendance system --No limit on sick leave that an employee canavail--Complete freedom to employees to come & go--Freedom to think and innovate

• Same rules for all categories of people--Same hotels when on travel--CEO as all others fly economy class

--CEO sits in similar cubicles as all others

In the Context ofContemporary

Developments In IRWe can Look at the Crisis at

Honda

Police beating HONDA workers on 25th July, 2005

The HONDA Case

• Subsidiary of Honda: 3000 employees: Plant set up in1999

• Aim: Produce product of highest quality at reasonableprice

• Honda philosophy of 3 joys:Buying/selling/manufacturing

• Alleged indifferent & authoritarian Indian middle mgt.

—Alleged assault by Japanese Manager

• Failed to meet WM expectation: Diwali gift/leave/Lack ofrespect

• Worker’s attempt to unionize: Mgt.’s resistance andaction:

• Violence on 25 July—Media coverage—State Govt.involvement

Key Issues and Problems:

1. Mgmt.’s approach to practicing a non-union modelmade them blind to reality DID NOT LISTEN TOWORKERS

2. Workers viewed Mgmt activity as coercive andrepressive

3. Incompetent people mgt. by Indian Middlemanagers—Indifference

4. Indian mgmt. blocking direct access to top companyexecutive

5. The 3 joys of HONDA were used as a means ofcontrol

Key Issues and Problems

7. Issues in cross-cultural management-- Japanese didn't understand issues in managing Indian people

8. Failure of mgt. to realize importance of Diwali inIndian IR

9. Tokenism of conciliation in resolving collectiveissues

10. Complacency on the part of Indian mgrs. about labourpower

Clash between Police and workers on 26 July, 2005

Workersmeet Sonia

Gandhi againstalleged

highhandednessof Honda

managementand the police

Key causes of the HONDA’s Difficulty1.Management taking Workers for granted:• Power of the former leadership not taken into account – he was

well liked Mr. Singh had been well liked

• No safety valve for Workers or way to address Grievances

• Overlooking the importance of Diwali to Indians – giving only asmall gift (Rs. 600 given)

• Worker facilities not provided - request dismissed

• Strict system of granting leave: Sermons given

Management taking Workers for grantedcontinued…

• Idiosyncratic VP (Mfg.): A hard task master with 14 ft stick—Kicked a WM who was 2 minutes late after tea

• Too many memos issued: Fear of managerial authority

• WM perceived partiality in posting by managers: Divide & Rule also

• Big difference between Hero-Honda & HMSI salaries: WM livingtogether

• Negative policies of the mgt. regarding union-formation madeworkers more determined - created fertile ground for the flare up

• High-handedness of the police, “ fighting fire with fire”

2. Ill prepared HR/IR team not able to tellthe emperor he had no clothes

—Poor HR Advocate Role

—HR/IR chief as an assistant mgr—Hereported to Mfg. Head

3. Small Number of HR/IR Team:--Only 10-12 out of 3000 people

4. No internalization of HR procedures &Practices:—No procedure for charge sheet

—Japanese thought people never revolt because they are“ gentle and not aggressive”

5. No alignment of Business & HR/IR Strategy

6. Low salary compared to Hero-Honda (same region)

7. Contract Workers removed every 6 months:Anguish constant training

Lessons inPeoplemanagementfromthe HONDA caseas a guide forBusiness success

1. Leadership matters2. Competent HR department is key3. Well crafted and communicated Mission

and Vision4. Maintain channels of communication5. HR Strategy must align with and support

business6. Listen to Employee concerns and issues

for Organizational Justice7. Use HR Interventions (BOTH HARD AND

SOFT) as tools for success(welfare plans, empowerment, reward and

recognition, etc.)

8. Keep cross-cultural issues in view

9. Establish a sense of urgency10.Recruit and Retain Talent - right person In

right job at the right time11.Be clear about performance and results –

let them drive success12.Create short term wins (reward and

recognition)

Success in India / value andunderstand differences

• Thank you

• SHRM

• And SHRM INDIA

• www.shrm.org

• www.shrm.org/india