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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
Diversity management
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
Diversity management
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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