HRM PRACTICES IN IT INDUSTRY

SUBMITTED BY: Bansu bharti (03) Beladiya ajay (04)

SUBMITTED To: Prof. Priyanka tailor

CONTENTS CHAPTER 1: INTRODUCTION 1 Human Resource Management.................................................... 2 Need of Human Resource........................................................... 3 Examples of Good Practices........................................................ 4 Key Functions of HRM...............................................................

CHAPTER 3: MANAGEMENT OF HUMAN RESOURCE AT TCS 1.1 Introduction............................................................................. 1.2 Background.............................................................................. 1.3 Overview of HR in TCS............................................................... 1.3.1. Diversity in Workplace........................................................... 1.3.2. Learning and Development..................................................... 1.3.3. Initial Learning Program (ILP)................................................. 1.3.4. Continuous Learning Program (CLP)......................................... 1.3.5. Leadership Development Program (LDP).................................. 1.3.6. Foreign Language Initiative (FLI)............................................ 1.3.7. Workplace Learnings............................................................. 1.3.8. EVA & Compensation Management.......................................... 1.4 The EVA Model......................................................................... 1.4.1. Strategic Benefits of EVA....................................................... 1.4.2. Incentive Scheme................................................................. 1.4.3. Separation........................................................................... 1.5 Journey Ahead......................................................................... 1.6 Exhibits................................................................................... 1.7 Bibliography...........................................................................

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CHAPTER 1: INTRODUCTION 1 HUMAN RESOURCE MANAGEMENT Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers. Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. 2 WHY IS HUMAN RESOURCE MANAGEMENT NEEDED? Effective HRM at a strategic level is a crucial source of sustaining an Institutes competitive advantage and continuous improvement particularly When it enables the following outcomes: Employees to contribute more fully to organisational objectives and Organisations to respond more positively and creatively to changes in their environment. It is a truism that nothing happens without people making it happen and systems, tools and techniques are becoming increasingly more sophisticated and useful. However, these systems cannot operate at all unless people use them by providing appropriate inputs and make interpretations and decisions based on the information available. Human resources, people, are THE critical ingredient in organisational success. For companies, people are an integral part of that competitive edge that lies between a community that is engaged with learning and a community that is not. They are critical in building the respect and value that the

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community has to have for companies to become the knowledge provider of choice. Management practice has evolved to a point where HRM is a distinct function that must be aligned with other strategic functions and directly affects the performance and sustainability of an Institute.

3 EXAMPLES OF GOOD PRACTICE Key Elements of HRM Plans include:

A well designed integrated organisational structure, and commentary on how it aligns with the Institutes strategic objectives Modern employment relations practices linked to strategic objectives A performance management system that includes a system for matching an individuals development to the organisations strategic needs

A program to achieve workforce productivity and flexibility Valuable Enterprise Agreements and processes Documented recruitment and selection processes, based on job analysis and core competencies A Succession Plan A documented HR strategy which specifies that workforce development will facilitate the achievement of business objectives and bring about the changes required

Regular review and assessment of HRM implementation, including an annual review of workforce development objectives and achievements Processes and practices that enable clear and genuine communication between staff members and their managers.

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4 KEY FUNCTIONS OF HRM

HUMAN RESOURCE PLANNING

TRAINING AND DEVELOPMEN T FUNCTIONS

RECRUITMEN T AND SELECTION

PERFORMANC E APPRAISALS

COMPENSATI ON AND BENEFIT

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MANAGEMENT OF HUMAN ASSETS AT TCS

TCS plans to recruit 30,000 persons in this financial year up to March 2007." - S. Padmanabhan , Executive VP, Global HR, TCS 1.1 INTRODUCTION India's largest tech company is also its best IT employer. It is not the pay alone. What is the key to the ever-complicated HR management puzzle? Well, asking the brains at TCS could help. When an above 70,000 employee-strong organization emerges as the best employer, one cannot help but wonder what it really takes to keep such a huge workforce added both organically and inorganically-really satisfied in these trying times. The company hogs the limelight when it is managing to maintain the lowest attrition rate in the industry. The figure is around 10% when the industry average hovers around 20%. Currently, 7.5% of TCS' workforce belongs to other nationalities and are spread across the globe. True to the characteristics of a global organization, TCS has added a local flavor to all its existing HR policies. S. Padmanabhan, Executive VP, Global HR, further asserts that, "The DNA of the company is to create an easy work environment and this has been built over years of effort." Not considered the best paymaster in the industry, TCS' compensation structure is also based on a simple philosophy - it is not sufficient to give a lot, but give it to the right people. Managing the people, revenues and
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the customers constitutes an ideal organization. TCS seems to be the perfect depiction, at least in the Indian IT scenario. What is there in TCS' HR practices that make it the best and biggest? Can it keep its head above water, in its efforts to grow even bigger?

1.2 BACKGROUND Sticking on to the tested and tried procedures does not qualify the existence of a company in the present environment, which is never the same on two consecutive days. It takes timely alterations in its HR practices to keep it abreast with the others in the race. When it comes to TCS, not just being in par is key, but leaping forward at a staggering pace ahead of its competitors holds the key. The company should effectively harness its human capital by making the necessary modifications in its HR practices from time to time. The HR practices should be in alignment with the overall strategy and processes for the company to keep going in the rat and mouse game. TCS has been thriving for this many years in a big way, and it becomes evident that HRM is in line with the strategy. In fact, TCS was the 'live case study' that capped off a six-day 'strategic leadership-training program' organized by the All-India Management Association and conducted by faculty from the Harvard Business School at the Tata Management Training Centre, Pune. The strategists speak volumes about the company. Appreciating the fact that, TCS was a role model, how about the torrential times ahead? The company is getting bigger and the competition more heated up. Hats off to TCS HR strategies till date. It is not the past but the future that counts. The company is assured of a bright future if it frames the HR strategies that is really becoming, as it has done in the past. Keeping the tempo goPage 7

ing, but modifications and interventions at the right time in the proper way will keep its position intact. Easier said than done. The big H - HOW? Thus strategic HRM comes to the forefront submerging HRM. The following discussion sheds light into the techniques of HRM adopted by TCS that enabled smooth functioning and growth in the global scenario. 1.3 OVERVIEW OF HR IN TCS 1.3.1 Diversity in Workplace According to Anjali Prayag, "For Indian companies, managing a diverse workforce is no longer a choice but an imperative." TCS is an equal-opportunity employer and TCSers come from many nationalities and speak many languages. TCS has the culture of celebrating everything under the sun, singing carols at Christmas and doing the dandiya dance at Navrathri with equal enthusiasm. Tata Consultancy Services (TCS) will recruit 4,000 foreign nationals in the forthcoming fiscal, including 800 people in the US and 1,000 in Latin America and the rest in China and Eastern Europe, according to Mr. S. Padmanabhan, Executive Vice-President of Global HR. The company intends to build a workforce with over 7.5% representation of foreign nationals. It is noteworthy that more than 25% of the employees are females. The company has adopted the diversified workforce approach in order to create a comfortable environment for clients and employees who work along with it on specific projects. The HR practioners who make a large hue and cry about bringing out the best using a diverse workforce can really quote TCS as an example. One of the chief reasons for the diversity drive was the 9/11 disaster. The move was initiated as a risk mitigating mechanism wherein, the company
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does not have to take the risk of losing its entire workforce due to a single catastrophe. The far sightedness of the company in this regard is further revealed by the strategy they plan to recruit the diverse workforce. In order to do this, the company is looking to implement the campus recruitment framework that it has in India in foreign countries. The company has established relationships with 180 campuses in India where it held recruitments and made 8,000 offers in the first quarter of 2006-07. Abroad, it is still in the process of building relationships with universities and colleges such as Nanyang Technological University, Singapore, and some universities in China. Acquisitions of Australia-based Financial Network Services, a 200-people strong company that offers retail-banking solutions, and Chile-based Comicrom, banking and pensions BPO that has about 930 people on its rolls, was also done as an effort to widen the foreign employee base of the company. The Indian IT scenario as such is transforming. Infosys has also announced an intake of 300 graduates from universities in the US in 2006 and about 25 from universities in the UK in 2007 as part of its commitment to create a diversified workforce. Though companies like Infosys and Wipro also go for the same, they are not successful with respect to TCS. Wipro is finding it a real challenge to manage the diverse workforce. TCS is fitting in the present.

1.3.2 Learning & Development (L&D)

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L&D Mission - "To enhance the competency capital of TCS, through cocreation of learning experience continuously and consistently, so as to facilitate delivery of world-class human capability to the customer, enabling the company to achieve its vision." TCS invests about 4 per cent of its annual revenues in Learning and Development, to build competency capital within the company in cutting edge technologies, domain and functional areas. Special emphasis is placed on providing necessary learning interventions to associates with potential of being leaders in the company. Thus, it is evident that focus is divided equally between the regular employees and managerial employees alike. All the learning programs are mapped to competencies and address learning needs at different proficiency levels. Learning and Development managers closely work with business to develop and deliver programs that will make our associates deliver value-for-money to our customers. Assessment centers are also being used by TCS. Inarguably, TCS is one of the real pioneers in the training. The state-of-the-art center in Thiruvanantapuram is by far the best than its adversaries. Several levels of learning are provided in TCS. Each of the levels is unique, aimed with varying objectives. The proactivity of the company comes to light, with the inclusion of newer modules as per the requirement. 1.3.3 Initial Learning Program (ILP) TCS Initial Learning Program is designed to provide a smooth transition from Campus to Corporate environment. The program is designed to transform graduate engineers into IT Consultants with global mindset. The participants are put through a rigorous 47-day program that has good mix of technical skills and soft skills. 1.3.4 Continuous Learning Program (CLP)
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Continuous Learning Program (CLP) is a manifestation of the company's commitment to the continuous growth of associates, in line with the core value of Learning & Sharing. Programs under the CLP umbrella arise out of business strategies, project needs, technology and business directions and individual aspirations, and span across Technologies, Domains, Processes and Soft-skills. This lay emphasis on long-term, short-term and medium-term needs of the organization alike. 1.3.5 Leadership Development Program (LDP) The program is to churn out the future leaders for the company. Associates are carefully assessed for leadership potential and then put through rigorous branded programs. TCS also encourages associates to attend various programs at premier B-schools across the globe. 1.3.6 Foreign Language Initiative (FLI) Foreign Language Initiative is to help the associates to communicate effectively with the customers. Under this initiative, associates are encouraged to learn one or more foreign languages. This initiative also helps associates to use English effectively for business communication. This is highly beneficial in a company with a diverse workforce. The cross-cultural issues are curtailed with the proper use of communication. 1.3.7 Workplace Learning Apart from all these initiatives TCS encourages "workplace learning". Associates are encouraged to learn while at work. To facilitate this, TCS has subscribed a huge library of e-Learning courses and online books. The classroom session and e-Learning materials complement each other.

1.3.8 EVA & Compensation Management

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An extremely competitive compensation scale, is rendered solidarity by a highly effective 'economic value added' (EVA) model, first of its kind to adopt the practice in India. It is a basis for measuring performance and bonus, and is measured at the enterprise and department levels. The EVA system calculates profits after considering all costs, including that of capital. If the revenues are in excess of the costs, including operating expenses, costs of developing and investing in the people, products and business, then value has been created. 1.4 THE EVA MODEL In giving shape to the EVA model, an organization needs to keep its focus towards the ultimate goal of aligning its people to the corporate mission, creating an entrepreneurial culture through an empowered work force, and building ownership with accountability. TCS worked out an EVA framework to align corporate value with the performance of the constituent business units and the individuals who comprised these. It translated to a compensation model, where the employee had a share in the corporate pie with add-ons from the profits of the Business Unit and the Individual Performance Factor. At the individual level, an employee needs to know the drivers to tweak to enhance the EVA of the company, of the business unit, and his own contribution towards all these. There are three basic drivers - revenue, cost, and capital charge. Revenue is driven by the rate or license price put into the product, sales, billable hours, response time, and domain skills. The individual works towards the improvement of the benefit package, which essentially has three components - the Corporate EVA, the Business Unit EVA, and the Individual Performance Factor. Out of the total EVA payment, a certain percentage goes to each employee on the basis of corporate EVA improvement. Secondly, if your business unit did better than another business unit, then automatPage 12

ically you got more than the other business unit. Again it is a team reward concept. The third one depends on the evaluation of individual performance.

1.4.1 Strategic Benefits of EVA With the introduction of EVA, yet another plank has fallen into place in the systemic efforts towards optimization. With the introduction of EVA, the company has to take a fresh look at the integrated system in a holistic perspective, and evolve ways and means of optimizing it. Implementation of EVA requires the integration of the planning and the tracking process. TCS sought to achieve this through a home grown tool called e-Pilot, which essentially drills down from strategy to day-to-day activity. This facilitates the integrated planning approach, in defining the corporate EVA, linking it to the business unit/cell, and further to various components down the line, all the way to the drivers connected to each activity.

1.4.2 Incentive Scheme

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A comprehensive EVA-based Incentive Compensation Plan is designed for the employees. Building the incentive scheme requires a detailed exercise in arriving at the target EVA. The TCS model was defined backed by a market analysis and a study of 24 competitors, largely outside India. The framework had specifications for target EVA, with carefully defined EVA intervals and provision for the positioning of zero EVA. The gradation continued through incentives corresponding target attainment, the double incentive. TCS is also implementing the bonus bank at the individual level. This exercise begins with a target bonus being ear-marked for allocation on corporate target realization, with a built in multiplication factor for exceeding the targeted EVA. When the corporate target is exceeded, a 'potential bonus' is declared. This accrues to the bonus bank of the individual as two components: Component A, the result of the share in the corporate pie; Component B, a composite factor depending on the business unit and individual performance. The accruals are cumulated over the years and the pay out each year is decided as a portion of this cumulative balance, leaving a surplus in the bonus bank. This concept of bonus bank allows an unlimited multi-year decision horizon, replacing the traditional thresholds and caps. It demands sustainable performance improvements, and maintains the important cumulative relationship between pay and performance.

1.4.3 Separation Following steps as part of my separation/ exit process :

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1 months notice period has to be given. Fill formal forms to get NOC from HR( for not owing any money to tcs, and for not being leggaly bound in anyway for any contract penalty). NOC for IT (laptop phone etc) NOC for library. Transitioning of the project after a backup/ replacement guy is recommended by the person leaving the organization. Also the approval of the client is important for the backup personal. Transfer of knowledge and training of the team for the expertise of the person leaving the oraganization. This is achieved by HR creating some sort of backup or succession plan for each team member ahead of time and have regular training and knowlege transfer as well as rotations within the team.

1.5 JOURNEY AHEAD TCS seemed to have done everything right till now. Their HR practices are so unique and they do rely on the buzz word of the era "knowledge capital". They ascribe such importance to training and learning to tap the potentials embedded in their workforce. EVA seems to be a concept that is well-implemented that extracts optimum performance. Synergy is brought to the fore by the interplay of workforce across the globe. They are providing different kinds of benefits to its employees to keep them intact. Above all, they were able to rightly mould their procedures in a way it matched with the changing requirements of the environment. Does all this provide room for complacency? The answer would be no. It would be casuistry to assume that it will be able to fit in the environment in the turbulent years to follow. The company is sitting pretty comfortably as their attrition rate is way below the
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industry average. They seem to underplay the fact that these figures are on the rise and have climbed to two figures from 6.1% in 2003-04. The gap between TCS and others are threateningly closing up. TCS cannot afford to relax and dwell on the previous statistics. Innovative interventions, as they have done in the past, are the real need of the hour. The big H-How is left to the strategists of the company. The message is transparent - curb the attrition rates. Too many cooks spoil the broth is an old saying that has its complete essence in the context of TCS. The company is widely practicing the concept of diversity and believes to generate the best out of it. So far so good, but how long it can be sustained? An unprecedented rise in the number of foreign nationals to increase the diversity in all probability will froth the cross-cultural issues and will start to be dysfunctional. Incidents related to diversity problems are being reported. A diverse organization is shaped or influenced by the basic corporate culture, geographical culture and personal culture of the people at various levels in the organization, which in turn is affected by the client culture. Thus, the cultural implications of diversity in an area that is to be looked into. TCS, known to have a good work culture can it maintain the status quo? Diversity management is not just managing gender diversity and ethnicity. The art, if not mastered, can impede the smooth functioning. It also means revising the retention strategies. "No two countries have the same retirement benefits," asserts Padmanabhan. So are the reward strategies and other parameters. It takes efforts to manage these effectively. Padmanabhan himself admits, "We have been dealing with and are used to working with foreigners as clients or business associates, but certainly not as team members." The chief factors causing problems between onshore and offshore workers were different communication styles (76 per cent of the times), different
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approaches to completing talks (53 per cent), different attitudes toward conflict (44 per cent) and different decision-making styles (44 per cent). The company should work out the threshold regarding diversity as they are bounded by capabilities. Daring to cross or accidentally crossing it would result in a debacle. TCS should be able to cut the line. The limiting point is again left in the hands of strategists. TCS is considered as one of the real aces when it comes to training and learning. But the modes of training might again prove to be obsolete tomorrow. They have to adopt newer modes of training, in a scenario when the competitors with Infosys in particular are picking up real pace. With reference to the effective learning and training approach as given in Exhibit 2, how the company can cope? Unless it is taken care of, it might prove detrimental for their growth. EVA has got its own inherent dangers. EVA was done with a view to inculcate long-term orientation in the minds of the employees. Effective implementation demands short-term targets. This reverse impact was unanticipated by the think-tanks of TCS. It all converges to the same point. What does the future has in store for TCS? There is no other side for the argument that it has to change to seal their secured future. The discussion unfolds here. Which path to opt? The tools and techniques that the company has to adopt, especially when it is in a growing mood. The company is the biggest and best but how can it retain the same status in its future efforts to grow. Neither of the attributes (big or best) can be compromised.

1.6 BIBLIOGRAPHY

www.coolavenues.com
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www.managementhelp.org www.humanresources.about.com www.icmrindia.org/casestudies www.ecch.com/caseresearch.results

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