People Management Strategy for Building a Global Workforce in the New India

8/14/2019 People Management Strategy for Building a Global Workforce in the New India

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People Management Strategy forBuilding a Global Workforce

in the New India

Debi S. Saini ([email protected])

Professor & ChairpersonHRM Group

Management Development Institute, Gurgaon

Presentation made atBoston College Global Workforce Roundtable Inaugural Summit

September 26-29, 2006; London, U.K. at GSK House, London

Session Title: Recruitment and Retention of a Multicultural Workforce


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For Retaining Talent, also Recognize the Individual

Diversity of the Young & Senior Employees

Young

Potential


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This presentation deals with the following:

Indias Demography: Some Basic Features

Indias Promise & Potential as a Business Hub

Some Problematic Issues: General & HR related

Theoretical Frameworkof People Management Strategy (PMS)

How PMS is being used to build a Great Place to Work (Key thesis: Intertwine individual diversity with Group Diversity)


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India:Some Basic

Demographic Features


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Indias Rich Heritage (1/3 GDP 500yrs ago)

I have traveled across the lengthand breadth of India and I havenot seen one person who is a

beggar, who is a thief. Suchwealth I have seen in this country,such high moral values, and

people of such caliber the verybackbone of this nation, which isher spiritual and culturalheritage.."


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India: Unique Features

Population 1100 m. (Sept, 2006)

531.3m. males; 495.7m. FemalesExpected: 1.4 b. by 2025 1.6 b. by 2050

Territory: about 2.4 % of world

Literacy: (7 yrs. +): 65.38 % 70% people live in 550,000 villages --Rest in 200 cities/towns

28 States; 7 Union Territories

179 languages (18 official);544 dialects

Agriculture base, high poverty

Caste/hierarchy influence mgt.

20% people are English-speakers


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Globalization Has Led toEmergence of New India


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Parts

Parts Parts

Assembly

Advertising

Design

Sales

Globalization: Location Economies in the New Era

Creating a Global Web

Sales

Parts

Sales


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Like these ducks, MNCs and Indian companies are

exploring the world around them for comfortable habitat


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The intensity of this

will be far greater

in time to come as incidenceof turbulence will increase

Global & Indian Corporates are

trying to be competitively better &

Global Leaders in the turbulent

Business Environment


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What should then be Done to Survive & Excel

You can not change the direction of the wind, but you can

always adjust your sails

People management strategy & diversity

management are seen enablers in this

direction


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New India in theGlobal Economy:Promise, Potential & Concerns


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Goldman Sachs Report of October, 2003:

Dreaming with BRICs: The path to 2050

Indias Total GDP today : $ 690 B. (Rs. 31,055 B.) [It is 4th largest economy: $2.6 Trillion (in purchasing power parity)]

India's GDP will reach$ 1 trillion by 2011& later as follows:

$ 2 trillion by 2020, $ 3 trillion by 2025,$ 6 trillion by 2032, $ 27 trillion by 2050

Becoming 3rd largest economy after USA & China in $ terms

In terms of GDP, India will overtake:

-- France by 2019, -- UK by 2022 -- Germany by 2023 -- Japan by 2032

Today:

Indian economy is 12th in GDP in $ terms & 4th in purchasing power parity

Share of India in world trade is 1% (till some time back it was 0.54 %)


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Sectors Percentage of

Workforce Employed

Percentage

Contribution to GDP

Agriculture

57 % 22%

Manufacturing 20% 24%

Services 23% 54%

Workforce/GDP Contribution in the

Three Sectors as per 2001 Census of India


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Year 1981 1991 2001 2003

Total Population 679

--

839

(2.4)

1019

(2.1)

1055

(1.7)

Total Labour Force 292

--

358

(2.26)

412

(1.5)

426

(1.6)

Total Employment 286

--

351

(2.27)

403

(1.5)

422

(2.4)

Unorganized Sector

Employment

263.3

--

324.3

(2.32)

375.2

(1.6)

395

(2.6)

Organized Sector

Employment

22.7

--

26.7

(1.8)

27.8

(0.4)

27.0

(-1.4)

Public Sector 15.6--

19.1(2.2)

19.1(0.0)

18.6(-1.3)

Private Sector 7.1

7.6

(0.7)

8.7

(1.4)

8.4

(-1.7)

Trend in Labour Force Employmentin India No. in Millions

(Figures in brackets are average annual rate of growth) Source: Economic Surveys of India.


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About 250 million

Rich, Upper Middle &

Middle Class

About 200 million

Lower Middle Class

About 400 million

between Lower Middle &

Poor Class

Between 1$ and 2 $ a day

About 250 million

Below Poverty Line

> 1 $ a day

Classification of Indian People on Income Basis (Rough)


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Attraction of India as Outsourcing Hub: Survey

Survey of 200, mostly 500 Fortune, cos. sponsored by FuquaSchool of Business, Duke University, USA, revealed:

They are likely to send work to following countries:

India (69 percent); China (8 percent); the Philippines (5 percent); Latin America (5 percent);

Eastern Europe (4 per cent); and the Caribbean/Mexico (2 per cent).

The work included: call centres, research, engineering

services and HR functions (Silverthorne, 2005).


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India: Some Growth/Development Indicators

1.Impressive rate of growth in past 3 years (7 to 8 %)

2. Impressive Foreign ex. reserves:151.6 b. $ in Sept., 2006

3. Debate on globalization: Concluded in its favour

4. Boom in BPO/IT and ITES industries

5. 250 M. middle class: Great hope for Global industrialists

[Cars: To have 36 times more cars in 2010 than what it had in 1990]


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Education System and Skills in India

The Educationbased on British system

One of the largest higher education systems in the world

--More than 7 million graduates every year

-- 3.1 millionjoin the workforce each yr.

20% of the population speakEnglish (About 200 m.)

--More English speakers in India than in England

India emerging the back office capital of world (IT & ITES)

--Today they employ about 1 million people


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Some Concerns for Business

1. Problem ofprofessionalism

2. Hierarchical mindsets (Caste accentuated this)

3. Bureaucratic mindset/public corruption

4. Lack ofprocess sensitivity

5. Sense ofcollective paralysis

6. Lackadaisical attitude to time

7. Labour law rigidity

8. Lack ofsafety consciousness

9. Inadequate infrastructure

10. Slow judicial & administrativeprocesses


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Problems in Developing Global HR Practices in India

Power distance is high: Internalizes inequality in society

--Hierarchy/status consciousness: Acts as tool of control

2. Individualism is low: Due tostrong family ties;promote dependence

3. Uncertainty avoidance is high;so low willingness for risk/change

4. Low masculinity:So orientation is to personalized relationships--Ratherthan towards performance:

5. Fifth Dimension: Long & short-term orientation --Traditionally, India is long-term oriented; but globalization making it short-termist

HR policies of MNCs influencing HR practices of Indian cos.

--Professional customer handling by Citibank influencing PSU banks

--e.g. de-layering has taken place in Indian orgs. such as ICICI


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In Defense of Theory

People Management Strategy (PMS)for Developing

Global Workforce


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Dave Ulrich, Human Resource champions,(Harvard University Press), p. 237

CK Prahlad, a world renowned professor of strategy, meetsfrequently with groups of HR executives. He claims that one

reason HR has not become pivotal to business as it should

be is that HR often lacks knowledge of theory. Theory

explains why events happen. Theory provides

explanations based on logic for how events relate to each

other. Theory weaves individual events into predictable

and generalizable patterns.

To make HR practices more than isolated acts, managersand HR professionals must master the theory behind HR

work; they need to be able to explain conceptually how and

why HR practices lead to their outcomes.


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They started looking for WHAT REALLY WORKS in 1997

Found the following 4 reasons for managerial failure

Limited resources

Separating theory from practice Relying on pre-conceived truth about success

Underestimating the difficulty of the problem

They developed a book to avoid these problems: It

Claims to be largest study of its kindAnalyzed 60,000 pages of info.from 200 firms in multiple industries

Involved interviews of journalists, executives, & Wall Street analysts

HRs Role in Building the 4+2 OrgWiliam Joyce, Nitin Nohria, & Bruce Robertson


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Important of Theoretical Frame

Baruch Levtalked of

Intangiblesof the

organization

that determineshare pricesDr. Baruch Lev

Professor of A/c & Finance

New York University

Stern School of Business

Th ti l F f S ft HRM


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Theoretical Frame of Soft HRM

Model and HRM Strategies

These Soft Strategies Include

Diversity management

Building a great place to work

Michael Beer

Emeritus professor

Harvard Business School

Th ti l F f


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Theoretical Frame of


Managing Diversity

Michalle Mor Barak

Sage, Thousand Oaks, 2005


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What is HRM Strategy? It is a philosophy of people-mgt:

Identify & enforce behaviour

It aims at Competitive advantage

Uses traditional & new interventions

PM & IRsubsumed in HRM: Helps dilutes Unionism

HRM strategy is the Single most imp. Consultancy Area


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A Model of Shift to HRM Philosophy

ENHANCED

COMPETITION

STRATEGIC

RESPONSE

Competitive

Performance

Attitude and

Behavior changes

Commitment Customer

orientation

Quality Flexible working

LineManagers

seize the

initiative

Change in key

Levers

Implications for Industrial Relations

Beliefs and

Assumptions

Source : John Storey, HRM


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Soft Strategic HRM Model: Themes

Empowerment/Involvement

Learning organization

Employee care: Orgl. justice

Employee respect, fairness,pride, camaraderie



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Some Hard Strategic HRM Themes

Enhanced mgt. control/Discipline

Flexibility promotion and VRS

Performance measurement

Scientific management and rationalization

Employing contract & casual workers

Hard Strategic HRM Model: Themes

F. W.

Taylor


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Need for Balancing Local & Global

Global mindset/rationality in people mgt.

Need to balance the local and global: Glocal

Need to balance hard & soft aspects

Need forbenchmarking best Practices


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Building

a Great Place to WorkThrough Strategic

HRM Practices


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State of Strategic HRM In India

HRnot reached strategic level in India as it should be

--Though expanded a great deal in last 5 years or so

Most Cos. trying to cope with retention: Not beyond

HR should learn to look at the larger picture

--Not doing workplace planning & HRmeasurement

50 Cos. in automotive supply: only 3-4 trying SHRM

HRmgrs admitSHRM is need of hour but somehow are not practicing


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Some Key Human Capital issues in India:Study by Aneeta Madhok (2006)

1. Creating a high-performance culture

2. Retaining talent

3. Recruiting

4. Frompatriarchic, hierarchical to team-based, informal org. culture

5. Linking training with performance

6. Compensating knowledge workers

7. Building interpersonal relationships/ managing conflict

8. Going global


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Companies Creating Family-like Situation at Workplace

. Like Tata Steel, Hero-Honda, and Sapient

--Invite family members to visit the workplace--to see environment in which kin working

Creates a linkbetween home and workplace

--Family controls WMs sentiments if unhappy

--Reminds him/her how caring is the employer

It helped Tata Steel to retrench 29,000 excess WM

--Done over a period of7 yrs.--Thus it became the cheapest steel-producing co. in world.

This strategy helped Hero-Honda remain union-free

Honda neglected HR: serious trouble: 25 July, 2005


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Examples of Some Companies

That PracticeSoft HR and Global

Workforce Strategies

Building a Place of Pride and Fairness for All


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Dimensions of a Great Place to WorkDimensions of a Great Place to Work

Ability to be oneself

Socially friendly and welcoming atmosphere

Sense offamily orteam

How it Plays Out in the WorkplaceHow it Plays Out in the Workplace

Communications are open and accessible Competence in coordinating human and material

resources

Integrity in carrying out vision with consistency

Support professional development & showappreciation

Collaborate with employees in relevant decisions

Care for employees as individuals with personal lives

In personaljob, individual contributions

In work produced by ones team or work group In the organizations products and standing in the

community

Equitybalanced treatment for all in terms of rewards

Impartialityabsence of favoritism in hiring andpromotions

Justicelack of discrimination, process for appeals

DimensionDimension

CredibilityCredibility

RespectRespect

PridePride

FairnessFairness

CamaraderieCamaraderie

Building a Place of Pride and Fairness for All

Great Place to Work

S k C i ti T h l i B l


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Susken Communication Technologies, Bangalore

Employees at Susken take pride in

--Work culture that company has created, and --The Values it upholds

Inspiring vision: unleashing India creativity.

It is a situation ofcomplete trust and equality: -- No-monitoring policy leads to transparency, freedom from fear

--No attendance system--No limit on sick leave that an employee can avail

--Freedom to employees to come and go--Freedom to think and innovate

Same rules forall categories of people --Same hotels when on travel

--CEO as all others fly economy class--& sits in similar cubicles as all others

Cl i St i (Mf ) C O f C i


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Classic Strips (Mfg.): Come Out of Control Mindset

214 WM including contract WMMost are blue-collared

--4 WM 25 yrs. ago(in 10 x 5): 44 acre campus in Vasai, Mumbai

Main motto was:dignity at work.

--Believes in: valuing every individual, giving people their due, freedom,respect, opportunity backed by lots of trng.

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

Employee spends 2 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

--Practices Proactive Diversity:Women make 1/3rd of the workforce

--It includes handicapped people

--The Company shares with employees a %age of its annual profits

M hi d & M hi d


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Mahindra & Mahindra Hired a Yale University-educated president ofHR

--Was earlier a CEO for 2 Tata Group companies

Now he heads 150 HR mgrs. at Mahindra & Mahindra

He claims to be doing a lot of strategic work

Aimed to give competitive advantage:

--Talent management--Creating synergy--Creating a culture of integration

--Mapping

--Succession planning

--Developing a global mind-set. (Grossman, 2006).

P d ti l P M t S i


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Prudential Process Mgt. Services(PPMS) Company with 1,200 employees: Serves Prudential UK

Has reduced attrition to 20 % (Industry 45%)

Strategy comprises: --Quickly hiring good candidates--Rapidly enhances their skills

--Offers them a conducive environment; makes them stick

--Quickly zeroes in on candidates and closes the deal

Sponsors continuing education

--After18 months, employees are eligible for MBA programs--Specially tailored with top-rated Indian business schools

--1/2 tuition fee paid by PPMS

P d ti l P M t S i


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Prudential Process Mgt. Services (PPMS) contd

Competes on its culture; not on compensation (Can come Drunk)

Claims to offer a lifestyle to employee: fraternal environment

--Family (friends, boyfriends, girlfriends) encouraged to visit workplace

Facilities like: training, mgt. education, career advancement

Believes in building an employer brand

Most important person next to CEO is HR chief

Said: if HR fails to live up to expectation, be disastrous to Co.

Sk k S l ti


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Skyworks Solutions

Reduced its attrition to 10 % (industry practice: 40 to 45%)

--Forengineers in the software industry

HR director is part of a collective group

--That runs operation along with the site director & the controller

India HR director is a board member of the Indian co.

With HR dutiesruns the site from operations perspective

--Not like the one in next slide

This is indeed a strategic function: Helps GPW


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Verghese Kurian: Father of Milk Revolution in India

People Management Strategy for Building a Global Workforce in the New India

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