UNIVERSITY OF MUMBAI

2013-14
PROJECT REPORT
ON
RECENT TRENDS IN HRM
SUBJECT HUMAN
RESOURCES MANAGEMENT
MANAGEMENT BY
NAME OF STUDENT: GAURAV. J. MADYE
COLLEGE SEAT NO :- 15
MASTER IN COMMERCE
( SEMESTER-II )

K.M.AGRAWAL COLLEGE OF
ARTS & COMMERCE, KALYAN (W).

CERTIFICATE
K.M.AGRAWAL COLLEGE, KALYAN

THIS IS TO CERTIFY THAT MR. GAURAV. J. MADYE HAS

WORKED AND COMPLETED HIS PROJECT WORK FOR THE DEGREE
OF MASTER IN COMMERCE IN THE FACULTY OF COMMERCE IN
THE SUBJECT OF HUMAN RESOURCES MANAGEMENT ON
TITLE OF PROJECT WORK TO BE WRITTEN RECENT TRENDS IN
HRM
UNDER MY SUPERVISION. IT IS HIS OWN WORK AND
FACTS REPORTED BY HIS PERSONAL FINDINGS AND
INVESTIGATIONS.
NAME & SIGNATURE
OF
PROF. . ANITA MANNA

PROF.

(INTERNAL GUIDE)

(EXTERNAL GUIDE)

PROF. ANITA MANNA

(PRINCIPAL)

(EXTERNAL EXAMINER)

DECLARATION
I, GAURAV. J. MADYE THE STUDENT OF K.M.AGRAWAL
COLLEGE OF M.COM (PART-1) HERE BY DECLARE THAT I
HAVE COMPLETED THIS PROJECT ON
IN THE -RECENT TRENDS IN HRM FOR THE ACADEMIC
YEAR 2013-14.
THE INFORMATION SUBMITTED IS TRUE AND
ORIGINAL TO THE BEST OF MY KNOWLEDGE.
I HERE BY FURTHER DECLARE THAT ALL
INFORMATION OF THIS DOCUMENT HAS BEEN OBTAINED
AND PRESENTED IN ACCORDANCE WITH ACEDAMIC RULES
AND ETHICAL CONDUCT.
COLLEGE SEAT NO. :- 15
YEAR:- 2013-14
DATE : PLACE :- KALYAN
NAME & SIGNATURE
(GAURAV. J. MADYE)

ACKNOWLEDGEMENT
I EXPRESS MY GRATEFUL THANKS TO PROJECT GUIDE PROF.
ANITA MANNA MADAM FOR HIS TIMELY GUDENCE AND HELP
RENDERED AT EVERY STAGE OF THE PROJECT WORK.
I EXPRESS SINCERE THANKS TO OUR PRINCIPLE PROF. ANITA
MANNA MADAM, WHO HAS GIVEN HER VALUABLE MORAL
SUPPORT,

MOTIVATION,

ATMOSPHERE

IN

THIS

INSPIRATION,
INSTITUTE

AND

FOR

THE

EDUCATIONAL
SUCCESSFUL

COMPETITION OF THE PROJECT WORK.

I ALSO WISH TO EXPRESS MY REGARDS TO THE LIBRERIAN
FOR HER CO-OPERATION IN PROVIDING ME WITH NECESSARY
REFERENCE MATERIALS.
I ALSO EXPRESS MY THANKS TO FACULTY MEMBERS AND FOR
CO-OPERATION AND HELP GIVEN IN COMPLETING THIS PROJECT.
FURTHER THANKS TO MY PARENTS, MY FREINDS AND MY
FAMILY FOR THEIR UNLIMITED AND SUPPORT DURING MY STUDY.

GAURAV. J. MADYE

Table of Contents

Introduction......6
New Trends in International HRM .8
Human Resource Management in India..10
Top 10 Human Resource Practices- Post Recession......13
Top 10 Trends in Employee Management..17
Top 10 Work Force Trends.............22
New Trend of Upgrading Talent.23
Changes in Technology...27
Case study on Indian airline HR problems29
Conclusion..........37
Biblography38

INTRODUCTION

uman resource management is a process of bringing people and

organizations together so that the goals of each other are met. The role of

HR manager is shifting from that of a protector and screener to the role of a

planner and change agent. Personnel directors are the new corporate heroes. The
name of the game today in business is personnel. Nowadays it is not possible to
show a good financial or operating report unless your personnel relations are in
order.
Over the years, highly skilled and knowledge based jobs are increasing while low
skilled jobs are decreasing. This calls for future skill mapping through proper
HRM initiatives.
Indian organizations are also witnessing a change in systems, management cultures
and philosophy due to the global alignment of Indian organizations. There is a need
for multi skill development. Role of HRM is becoming all the more important.
Some of the recent trends that are being observed are as follows:

The recent quality management standards ISO 9001 and ISO 9004 of 2000
focus more on people centric organizations. Organizations now need to
prepare themselves in order to address people centered issues with
commitment from the top management, with renewed thrust on HR issues,
more particularly on training.

Charles Handy also advocated future organizational models like Shamrock,

Federal and Triple I. Such organizational models also refocus on people
centric issues and call for redefining the future role of HR professionals.

To leapfrog ahead of competition in this world of uncertainty, organizations

have introduced six- sigma practices. Six- sigma uses rigorous analytical
tools with leadership from the top and develops a method for sustainable
improvement. These practices improve organizational values and helps in
creating defect free product or services at minimum cost.

Human resource outsourcing is a new accession that makes a traditional

HR department redundant in an organization. Exult, the international pioneer
in HR BPO already roped in Bank of America, international players BP
Amoco & over the years plan to spread their business to most of the Fortune
500 companies.

With the increase of global job mobility, recruiting competent people is also
increasingly becoming difficult, especially in India. Therefore by creating an
enabling culture, organizations are also required to work out a retention
strategy for the existing skilled manpower.

NEW TRENDS IN INTERNATIONAL HRM

International HRM places greater emphasis on a number of responsibilities

and functions such as relocation, orientation and translation services to help
employees adapt to a new and different environment outside their own country.
Selection of employees requires careful evaluation of the personal characteristics
of the candidate and his/her spouse. Training and development extends beyond
information and orientation training to include sensitivity training and field
experiences that will enable the manager to understand cultural differences better.
Managers need to be protected from career development risks, re-entry problems
and culture shock. To balance the pros and cons of home country and host country
evaluations, performance evaluations should combine the two sources of appraisal
information. Compensation systems should support the overall strategic intent of
the organization but should be customized for local conditions.
In many European countries - Germany for one, law establishes representation.
Organizations typically negotiate the agreement with the unions at a national level.
In Europe it is more likely for salaried employees and managers to be unionized.

HR Managers should do the following things to ensure success-

Use workforce skills and abilities in order to exploit environmental

opportunities and neutralize threats.
Employ innovative reward plans that recognize employee contributions and
grant enhancements.
Indulge in continuous quality improvement through TQM and HR
contributions like training, development, counseling, etc
Utilize people with distinctive capabilities to create unsurpassed competence
in an area, e.g. Xerox in photocopiers, 3M in adhesives, Telco in trucks etc.
Lay off workers in a smooth way explaining facts to unions, workers and
other affected groups e.g. IBM, Kodak, Xerox, etc.

HR Managers today are focusing attention on the following-

Policies- HR policies based on trust, openness, equity and consensus.

Motivation- Create conditions in which people are willing to work with zeal,
initiative and enthusiasm; make people feel like winners.
Relations- Fair treatment of people and prompt redress of grievances would
pave the way for healthy work-place relations.
Change agent- Prepare workers to accept technological changes by
clarifying doubts.
Quality Consciousness- Commitment to quality in all aspects of personnel
administration will ensure success.
Due to the new trends in HR, in a nutshell the HR manager should treat
people as resources, reward them equitably, and integrate their aspirations
with corporate goals through suitable HR policies.

HUMAN RESOURCE MANAGEMENT IN INDIA

India is being widely recognized as one of the most exciting emerging
economics in the world. Besides becoming a global hub of outsourcing, Indian
firms are spreading their wings globally through mergers and acquisitions. During
the first four months of 1997, Indian companies have bought 34 foreign companies
for about U.S. $11 billion dollars. This impressive development has been due to a
growth in inputs (capital and labor) as well as factor productivity. By the year
2020, India is expected to add about 250 million to its labour pool at the rate of
about 18 million a year, which is more than the entire labour force of Germany.
This so called demographic dividend has drawn a new interest in the Human
Resource concepts and practices in India.
Indian HRM in Transition
One of the noteworthy features of the Indian workplace is demographic
uniqueness. It is estimated that both China and India will have a population of
1.45 billion people by 2030; however, India will have a larger workforce than
China. Indeed, it is likely India will have 986 million people of working age
in 2030, which will probably be about 300 million more than in 2007. And by
2050, it is expected India will have 230 million more workers than China and
about 500 million more than the United States of America (U.S.). It may be
noted that half of Indias current population of 1.1 billion people are under of
25 years of age. While this fact is a demographic dividend for the economy, it
is also a danger sign for the countrys ability to create new jobs at an
unprecedented rate.

10

With the retirement age being 55 to 58 years of age in most public sector
organizations, Indian workplaces are dominated by youth. Increasing the
retirement age in critical areas like universities, schools, hospitals, research
institutions and public service is a topic of considerable current debate and
agenda of political parties.
The divergent view, that each society has a unique set of national nuances,
which guide particular managerial beliefs and actions, is being challenged in
Indian society. An emerging dominant perspective is the influence of
globalization on technological advancements, business management, and
education and communication infrastructures are leading to a converging
effect on managerial mindsets and business behaviors. And when India
embraced liberalization and economic reform in the early 1990s, dramatic
changes were set in motion in terms of corporate mindsets and HRM
practices as a result of global imperatives and accompanying changes in
societal priorities. Indeed, the onset of a burgeoning competitive service
sector compelled a demographic shift in worker educational status and
heightened the demand for job relevant skills as well as regional diversity.
Expectedly, there has been a marked shift towards valuing human resources
(HR) in Indian organizations as they become increasingly strategy driven as
opposed to the culture of the status quo. Accordingly, competitive advantage
in industries like software services, pharmaceuticals, and biotechnology
(where India is seeking to assert global dominance), the significance of HRs
is being emphasized. These relativities were demonstrated in a recent study of
three global Indian companies with (235 managers) when evidence was
presented that positively linked the HRM practices with organizational
performance. In spite of this trend of convergence, a deep sense of locality
11

exists creating more robust cross vengeance in the conceptual as well as

practical domain.
Key HRM Practices in Indian Organizations
HRM Practice Observable Features
Job Description

Percentage of employees with formally defined work roles is very high in the
public sector.

Recruitment

Strong dependence on formal labour market. Direct recruitment from

institutions of higher learning is very common amongst management,
engineering and similar professional cadres. Amongst other vehicles, placement
agencies, internet and print media are the most popular medium for
recruitment.

Compensation

Strong emphasis on security and lifetime employment in public sector

including a range of facilities like, healthcare, housing and schooling for
children.

Training
and Poorly institutionalized in Indian organisations. Popularity of training programs
Development
and their effect in skill and value development undeveloped.
Performance
Appraisal
Promotion
Reward

A very low coverage of employees under formal performance appraisal and

rewards or organisational goals
and

Moderately variable across industries. Seniority systems still dominate the

public sector enterprises. Use of merit and performance limited mostly to
globally orientated industries.

Limited in scope. The seniority based escalator system in the public sector
provides stability and progression in career. Widespread use of voluntary
Career Planning
retirement scheme in public sector by high performing staff. Cross functional
career paths uncommon.
Gender Equity

Driven by proactive court rulings, ILO guidelines and legislature provisions.

Lack of strategic and inclusion vision spread.

Reservation
System

The central government has fixed 15 per cent reservations for scheduled castes,
7.5 per cent for scheduled tribes and 27 per cent for backward communities.
States vary in their reservation systems.

12

TOP 10 HUMAN RESOURCE PRACTICES-POST RECESSION

Top Ten HR Practices that can help you achieve your organizational goals
every year:
1. Safe, Healthy and Happy Workplace: Creating a safe, healthy and happy
workplace will ensure that your employees feel homely and stay with your
organization for a very long time. Capture their pulse through employee surveys.
2. Open Book Management Style: Sharing information about contracts, sales,
new clients, management objectives, company policies, employee personal data
etc. ensures that the employees are as enthusiastic about the business as the
management. Through this open book process you can gradually create a culture of
participative management and ignite the creative endeavor of your work force.. It
involves making people an interested party to your strategic decisions, thus
aligning them to your business objectives. Be as open as you can. It helps in
building trust & motivates employees. Employee self service portal, Manager online etc. are the tools available today to the management to practice this style.
3. Performance linked Bonuses: Paying out bonuses or having any kind of
variable compensation plan can be both an incentive and disillusionment, based on
how it is administered and communicated. Bonus must be designed in such a way
that people understand that there is no payout unless the company hits a certain
level of profitability. Additional criteria could be the team's success and the
individual's performance. Never pay out bonus without measuring performance,
unless it is a statutory obligation.
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4. 360 Degree Performance Management Feedback System: This system, which

solicits feedback from seniors (including the boss), peers and subordinates, has
been increasingly embraced as the best of all available methods for collecting
performance feedback. Gone are the days of working hard to impress only one
person, now the opinions of all matter, especially if you are in a leadership role (at
any level). Every person in the team is responsible for giving relevant, positive and
constructive feedback. Such systems also help in identifying leaders for higher
level positions in the organization. Senior managers could use this feedback for
self development.
5. Fair Evaluation System for Employees: Develop an evaluation system that
clearly links individual performance to corporate business goals and priorities.
Each employee should have well defined reporting relationships. Self rating as a
part of evaluation process empowers employees. Evaluation becomes fairer if it is
based on the records of periodic counseling & achievements of the employee,
tracked over the year. For higher objectivity, besides the immediate boss, each
employee should be screened by the next higher level (often called a Reviewer).
Cross functional feedback, if obtained by the immediate boss from another
manager (for whom this employee's work is also important), will add to the
fairness of the system. Relative ratings of all subordinates reporting to the same
manager are another tool for fairness of evaluation. Normalization of evaluation is
yet another dimension of improving fairness.

14

6. Knowledge Sharing: Adopt a systematic approach to ensure that knowledge

management supports strategy. Store knowledge in databases to provide greater
access to information posted either by the company or the employees on the
knowledge portals of the company. When an employee returns after attending any
competencies or skills development program, sharing essential knowledge with
others could be made mandatory. Innovative ideas (implemented at the work place)
are good to be posted on these knowledge sharing platforms. However, what to
store & how to maintain a Knowledge base requires deep thinking to avoid clutter.

7. Highlight performers: Create profiles of top performers and make these visible
through company intranet, display boards etc. It will encourage others to put in
their best, thereby creating a competitive environment within the company. If a
systems approach is followed to shortlist high performers, you can surely avoid
disgruntlements.

8. Open house discussions and feedback mechanism: Ideas rule the world. Great
organizations recognize, nurture and execute great ideas. Employees are the
biggest source of ideas. The only thing that can stop great ideas flooding your
organization is the lack of an appropriate mechanism to capture ideas. Open house
discussions, employee-management meets, suggestion boxes and ideas capture
tools such as Critical Incidents diaries are the building blocks that can help the
Managers to identify & develop talent.

15

9. Reward Ceremonies: Merely recognizing talent does not work, you need to
couple it with ceremonies where recognition is broadcast. Looking at the Dollar
Check is often less significant than listening to the thunderous applause by
colleagues in a public forum.

10. Delight Employees with the Unexpected: The last but not least way is to
occasionally delight your employees with unexpected things that may come in the
form of a reward, a gift or a well-done certificate. Reward not only the top
performers but also a few others who are in need of motivation to exhibit their
potential.

16

TOP 10 TRENDS IN EMPLOYEE MANAGEMENT

The Indian workplace has undergone a sea change, and human resource
priorities have now taken centre stage. In a knowledge economy, it is peoplenot
capital or marketwho make all the difference. As talent occupies centre stage in
the Indian workplace, managing and retaining manpower is becoming crucial to an
organization's success. To achieve this, companies across sectors are focusing on
some of the more critical HR practices. Ten such trends are:
1. Leadership Development: Creating a pipeline of leadership talent is key to a
business' future growth. Peter Cappelli, the professor of management and director
of the Center for Human Resources, The Wharton School, University of
Pennsylvania, says it is imperative for the top level of an organization to make
leadership talent management a priority, and put its money into long-term plans, as
opposed to short-term ones. If companies are worried about their talent pipeline,
they have to develop their people, says Cappelli. Also, good bench strength helps
companies deal with volatility in labour supply. "Companies including Hindustan
Unilever, Procter and Gamble and GlaxoSmithKline have been able to withstand
attrition in key executives because they have always invested in developing
leaders," says P. Dwarakanath, president, National Human Resource Development
Network. Experts say succession planning should not be seen in isolation, but as
part of overall organizational development.
2. Work-life Balance: No company or employee has found the Holy Grail of
balancing work and life, but that is a work in progress. However, multinationals,
information technology (IT) and IT enabled services (ITeS) companies have been
able to promote the balance between career, family and leisure-time better. Other
17

sectors have also been increasingly promoting a work-life balance. Interestingly,

most companies in India use benefits such as flexible timings, telecommuting,
crche facilities and concierge services as an attraction and retention strategy. "We
are yet to fully buy into the fact that employees become more productive and
remain motivated when companies allow them to have a life beyond work," says
Prabir Jha, global head, human resources, Dr Reddy's Laboratories Ltd.

3. Inclusion and Diversity: With higher numbers of people joining the workforce
in India at a time when companies across the world have an ageing workforce on
their rolls, conflicts are to be expected. "One of the challenges companies face
today is resolving conflicts among different generations," says Pavan Bhatia,
executive director, human resources, PepsiCo India Holdings Pvt. Ltd. "An
inclusive and diverse workforce is the future of the workplace," he adds. Therefore,
companies are investing both time and resources in ensuring that all age groups are
comfortable working together. Organizations in India have also been focusing on
making workplaces more representative. For companies such as ICICI Bank Ltd,
Hindustan Unilever Ltd, Vedanta Resources, PepsiCo India, Shell Companies in
India and Bharti Airtel Ltd, gender diversity has become a critical area of focus.
4. Health and wellness: The work culture at globalized workplaces involves long
working hours, frequent travel, multitasking and tight deadlinesand all this often
leaves employees mentally and physically stressed. "Employees are increasingly
grappling with lifestyle-related diseases such as hypertension, diabetes and
cholesterol, which can be checked by regular monitoring and a healthy lifestyle,"
says A. Sudhakar, executive vice-president, Human Resources, Dabur India.
Companies have begun to realize that healthy employees contribute to higher
18

efficiency and productivity. Apart from medical benefits, companies are also
offering yoga classes and health camps and have doctors on campus. HCL
Technologies Ltd, for instance, like many other IT companies, has 24/7 medical
facilities in all its centres. DuPont has an Intranet-based tool, which assesses an
employee's health through a questionnaire and makes recommendations based on
the scores.
5. Right Skilling: Right skilling, or matching jobs with a particular level of
training rather than hiring over skilled workers, is gaining currency. Companies use
this strategy to tide over a manpower supply crunch and to broaden their talent
base. "You don't need an IITian to supervise a car maker's shop floor or a
management graduate from a premier business school to sell soaps, which largely
has been the case," says T.V. Mohandas Pai, head, human resources, Infosys
Technologies Ltd.
6. Managing Solid Citizens: "Solid citizens" are the second-rung performers who
make up 50-60% of employees in any organization. They are the backbone of any
company. Although they contribute significantly to the company's overall
performance, they don't have the potential to become leaders. "Unfortunately, most
organizations focus on the 15-20% key talent at the expense of solid citizens," says
Dwarakanath. Organizations which neglect their solid citizens are doing this at
their own peril, say experts. Unlike star performers who are potential leaders, and
therefore more likely to move out of an organization faster, this group provides
stability and bench strength to an organization.
7. Instant Rewards: Recognizing and rewarding performers is one of the most
effective tools to attract and retain the right talent. Companies in India are looking
at rewards systems more seriously, and are adopting total rewards practices that
19

include compensation in both cash and kind. Apart from lifestyle perquisites such
as a house, a car or a club membership, profit-linked incentives, deferred gratuity,
and wealth-building programs in the form of stock options and soft loans,
companies are also including work-life balance programs; competency pay
packages where niche skills are compensated; and career opportunities, such as
overseas assignments, new projects, etc., to reward staff. These rewards can be
tailored to suit the top performers' aspirations to achieve maximum effect.
8. Measuring human capital: Evaluation of performance plays a key role, not just
in rewarding an individual employee, but also in setting performance benchmarks.
And hence, there is the need for a fair and transparent performance management
system. A strong performance analysis helps make human resources both efficient
and effective. "In today's business environment, where the focus is on increasing
performance, companies must have robust systems to identify performers so that
the best performers get identified, recognized and duly rewarded," says Ganesh
Shermon, partner and head, human capital advisory service, KPMG India.
Shermon cites the example of oil and gas company Bharat Petroleum Ltd, which
has instituted a balanced scorecard based on key result areas to measure
performance.
9. Managing Aspirations: As aspirations of organizations grow, so do those of
employees. And, with the changing lifestyles and profiles of the workforce,
personal and professional aspirations of employees are not just varied, but are
increasingly on the rise. "Since competitive advantage depends on competent
people, knowing what employees aspire for could just be the way to have an edge
over competitors," says Kishore Poduri, head, human resources, eClerx Services
Ltd.

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10. 360 Degrees Feedback: Finally, recognizing the need to make performance
appraisal systems more effective, an increasing number of companies are using the
360 degrees or multi-rater feedback process. Unlike the traditional appraisal
system, which gives one-dimensional feedback, this one allows an employee to
give feedback to her reporting manager, peers, direct reports and others. "Multirater feedback not only reduces the risk of biased perceptions, but also gives you a
holistic view from all the stakeholders within the company," says Sanjay Bali,
vice-president, HR, Samsung India Electronics Pvt. Ltd. While most companies
started using this system as a means for performance appraisal, most of them now
use the 360 degrees feedback system to identify the learning and development
needs of employees.

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TOP 10 WORKFORCE TRENDS

1. A global war for Smart Talent will be the top driver of competitive
advantage, as educated, skilled and experienced employees will be in
demand.
2. The aging of the population in America and Europe will have dramatic effect
on society and the economy impacting productivity, knowledge and growth.
3. An increase in women in the U.S. workforce will change the policies, power
and positioning of organizations.
4. A diversity savvy workforce will be required to understand and align with
the diversity in the global marketplace.
5. Finding, training and retaining high-tech skilled employees from a global
talent pool will be the greatest challenge for every organization.
6. Incorporating innovation into the organizational DNA will be a key driver of
future competitive advantage.
7. Building a sustainable, healthy and green workplace will be an essential
capability for retaining talent and attracting the future workforce
8. Preparing employees to meet the challenges of a complex and stressful
future, where accelerated change and risks can be managed effectively with
high performance agility, will be vitally important.
9. An organization that is committed to employee development, continual
education and training, will return to the organization new skills and new
competencies.
10. Attracting the next workforce, or preparing the current one, will require a
new workforce culture to better understand transnational teams, online
collaboration, globalization and business process transformation.

22

NEW TREND OF UPGRADING TALENT

A downturn can give smart companies a chance to upgrade their talent.

Downturns place companies' talent strategies at risk. As deteriorating performance
forces increasingly aggressive headcount reductions, it's easy to lose valuable
contributors inadvertently, damage morale or the company's external reputation
among potential employees, or drop the ball on important training and staffdevelopment programs. But there is a better way. By emphasizing talent in costcutting efforts, employers can intelligently strengthen the value proposition they
offer current and potential employees and position themselves strongly for growth
when economic conditions improve.
Companies can maintain their attractiveness to internal and external talent by using
cost-cutting efforts as an opportunity to redesign jobs so that they become more
engaging for the people undertaking them. A job's level of responsibility, degree of
autonomy, and span of control all contribute to employee satisfaction. Headcount
reductions provide a powerful incentive to use existing resources better by
breaking down silos and increasing the span of control for challenging managerial
roles-thus improving the odds of engaging key talent in the redesigned jobs.
Consider Cisco Systems' approach to downsizing during the last recession. In
2001, as deteriorating financial performance forced the elimination of 8,500 jobs,
Cisco redesigned roles and responsibilities to improve cross-functional alignment
and reduce duplication. The more collaborative environment fostered by such
moves increased workplace satisfaction and productivity for many employees.
Initiatives like Cisco's succeed when companies focus on redesigning jobs and
retaining talent at the outset of downsizing efforts.
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In addition to redesigning roles, companies cutting jobs should carefully protect

training and development programs. These are not only essential to maintaining
workplace morale and increasing long-term productivity, but they also give people
the skills necessary to carry out redesigned jobs that have greater spans of control.
During the last recession, International Paper continued offering classes at its
leadership institute by replacing external facilitators with the company's senior
leaders. This approach not only reduced the cost of delivery but also, thanks to the
involvement of senior leaders, redirected the content of the leadership program by
tying it more closely to decisions and skills affecting the company's current
performance. Similarly, IBM retained its employee-development programs during
its major performance challenges in the mid- to late 1980s. It took the arrival of
Lou Gerstner as CEO and a new strategy to turn the company around, but the
historical investments IBM had made in developing its people helped achieve a
successful turnaround.
Before undertaking widespread layoffs, companies should use their performancemanagement processes to help identify strong employees. Companies that conduct
disciplined, meritocratic assessments of performance and potential are well placed
to make good personnel decisions. These companies should also bring additional
strategic considerations to the decisions. They should assess which types of talent
drive business value today and which will drive it three years from now, as well as
which talent segments are currently available and which will be in the futurekeeping in mind, for example, that new MBAs will be equally available in two
years. They should also look at which types of talent would take years to replace or
develop-for instance, skilled electric utility engineers in an environment where
retirements are dramatically reducing supply. Performance management well
informed by key strategic questions can minimize the negative cultural impact of
24

downsizing, improve the bottom line, and help identify talented people the
company should try to retain.
Companies that are reducing staff must focus relentlessly on the internal cultural
and external reputational implications of cost-cutting efforts. Although strong
employer brands are resilient, it's difficult to reestablish brand strength once the
culture has been damaged. The way many companies conduct large-scale
downsizing decreases efficiency, morale, and motivation on the part of remaining
employees. It also increases voluntary turnover among high performers and
compromises a company's ability to attract strong talent in the future, as potential
employees wonder how risky it is to take a job there.
Counteracting these tendencies requires creativity. In 2001, Cisco gave generous
severance packages and assistance with job searches to the workers it laid off and
launched a program that paid one-third of salary, plus benefits and stock options, to
ex-employees who agreed to work for a local charity or community organization.
Steps like these protected Cisco's employer brand by attempting to make departing
employees feel better about Cisco and underscored the company's commitment to
its people for those who remained. The results were measurable: employee
satisfaction remained high, and Cisco retained a prominent spot on Fortune
magazine's "Best Companies to Work For" list.
A strong employer brand is also important for companies undertaking selective
recruitment even as they cut personnel costs elsewhere. Using slowdowns to
uncover and hire displaced talent is often fruitful. Studies have shown that
although overall levels of recruitment may level off or even fall, the quality of
workers hired rises in recessions. And opportunities to find and hire displaced
talent may be particularly valuable during this downturn, as massive downsizing in
25

the financial-services sector makes available to nonfinancial companies a large

pool of highly educated and motivated professionals who previously might not
have considered jobs outside their previous employers or industries.
Some organizations are moving surprisingly quickly in response to these
opportunities in the talent market. In late October 2008, the US Internal Revenue
Service hosted a Manhattan career fair targeted at displaced financial-services
professionals. More than 1,300 people attended, many standing in line for three
hours to learn more about an employer that offered a newly interesting brand of
"job stability."
Cost cutting during a downturn is often necessary to ensure a company's current
profitability and future competitiveness. Rather than freezing all hiring and
employee-development programs, companies should use this period as an
opportunity to upgrade talent and better engage existing staff. This means
reinventing a percentage of the capital liberated from cost cutting into, for
example, selective recruiting and development programs and in efforts to safeguard
the culture and to redesign jobs so that they are more engaging to the remaining
employees.

26

CHANGES IN TECHNOLOGY
Technology may have made things easier for recruiting managers, but it s
beginning to show its evil side as managers go overboard with it...
Key learnings:
Technology is a tool that can be used to aid the recruiting process.
Technology cannot replace human touch and therefore cannot be used to build
relationships
Technology has indeed been a blessing. The reaction time to any problem has been
slashed over a hundred times and leaders, managers and the worker fraternity in
general is more connected now than ever before. However, like all good things, the
positive streak of technology too can fade if it's taken too far. Critics who play
down the role of technology, have always condemned the way technology has
eroded the personal touch among people. In addition, they blame it for the way
managers use it for the sake of speed and not quality. Amidst the brickbats,
technology has emerged as a force to reckon with and has undoubtedly redefined
the way business is done.
Technology is secular. It has touched every aspect of business however little it may
be. And the human resources function is no exception. In fact the role of
technology in the arena of staff management has been incredible and today the
function has become completely technology-driven. The function right from the
recruiting stage to the exit interview and everything that comes in between is
largely driven by technology. While this may be seen as a revolution of sorts by
some, for many such aggressive takeover is beginning to take its toll on the
efficiency with which the function is meant to be executed. And according to
analysts the first casualty is the recruiting function.
Impersonal recruiting: A recent forum on "Technology and Its Application in the
Human Resources Function", conducted at the Town's hall, at Vancouver, presented
a rather scary picture of what awaits us in the near future. A few speakers at the
forum unintentionally spelt horror for the recruiting function. They were rather
27

candid about the way they recruit and the role of technology in their recruiting
process. One of the speakers went to the extent of saying that thanks to technology
there is no real need of meeting the candidate or even speaking to him. Recruiting
managers can make their decision by simply exchanging mails!
The trend is indeed horrifying. How can one replace personal relationships that we
by virtue of being humans share with everything that we come in contact with?
Reducing the potency of a relationship to a mere click of a button can be damaging
to the very basis on which an organization is built. If every recruiting manager
were to select recruits on the basis of the mails exchanged then the concept of a
"competitive edge" or a "differentiating factor" will not be there at all since
everybody would be doing exactly the same thing. Moreover in such a
technologically-intensive scenario , the need for any other staff management
initiative too would seem redundant as people would barely interact personally and
even if they did it would only happen in case of a system crash.
The scenario can be nerve- wrecking and therefore it's time recruiting managers
wake up and understand that technology is only a tool and it can by no standards
be used to replace relationships.
A typical sales activity needs four basic pre-requisites for its success. These
include:

Establish and nurture a relationship

Identify customer needs
Strategies to overcome difficulties in meeting the needs
Complete the sale

Each of these factors is relevant even as we see recruiting as a sales strategy. Hence
recruiting managers must use technology in the third stage where difficulties
hampering the activity need to be overcome by use of means that are both time and
cost-effective.
Understanding how technology can aid the process of recruiting will help
recruiting managers maximize their efficiencies. The best solution therefore would
be to integrate the benefits of technology with the recruiting process in a way that
helps maximise its efficiency.
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CASE STUDY : INDIAN AIRLINES HR PROBLEMS

CASE NOTES
FLYING LOW

Indian Airlines (IA) Indias national carrier is a perfect example of a monopoly gone
berserk with the absolute power it had over the market.

Continual losses over the years, frequent human resource problems and gross
mismanagement were just some of the few problems plagued the company.

Frequent strikes by IA pilots reflected the adamant attitude of the pilots resulting in
increased public resentment towards the airline.

Recurring human resource problems were attributed to its lack of proper manpower
planning and underutilization of existing manpower.

The recruitment and creation of posts in IA was done without proper scientific analysis of
the manpower requirements of the organization.

Employee unions were rather infamous for resorting to industrial action on the
slightest pretext.

The Government took various steps to turn around IA and initiated talks for its
disinvestment.

Amidst strong opposition by the employees, the disinvestment plans dragged on

endlessly well into mid 2001.

This shows how poor management, especially in the human resources area, could spell
doom even for a Rs 40 billion monopoly.

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BACKGROUND NOTE

IA was formed in May 1953 with the nationalization of the airlines industry through the
Air Corporations Act.

IA and its subsidiary, Alliance Air, provided domestic air services.

IAs network ranged from Kuwait in the west to Singapore in the east, covering 75
destinations (59 within India, 16 abroad).

In 1999, the company

In 1999, it had a fleet strength of 55 aircraft - 11 Airbus A300s, 30 Airbus A320s, 11

Boeing B737s and 3 Dorniers D0228.

In 1994, the Air Corporation Act was repealed and air transport was thrown open to
private players.

Corporate houses entered the fray and IA saw a mass exodus of its pilots to private
airlines.

To counter increasing competition IA launched a new image building advertisement

campaign.

Improved its services by strictly adhering to flight schedules and providing better inflight and ground services.

Launched several other new aircraft, with a new, younger, and more dynamic in flight
crew.

These initiatives were soon rewarded in form of 17% increase in passenger revenues
during the year 1994.

Competitors like Sahara and Jet Airways (Jet) provided better services and network.

Unable to match the performance of these airlines IA faced severe criticism for its
inefficiency and excessive expenditure human resources.

Staff cost increased alarmingly during 1994-98.

These costs were responsible to a great extent for the companys frequent losses.

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By 1999 the losses touched Rs 7.5 bn.

In the next few years, IAs market share, however continued to drop.

In 1999, while IAs market share was 47%, the share of private airlines reached 53%.

Unnecessary interference by the Ministry of Civil Aviation was a major cause of

concern for IA.

Interference ranged from deciding on the crews quality to major technical decisions in
which the ministry did not even have the necessary expertise.

IA had to operate flights in the North-East at highly subsidized fares to fulfil its social
objectives of connecting these regions with the rest of the country. These flights
contributed to the IAs losses over the years.

The carriers balance sheet heavily skewed towards debt with an equity base of Rs 1.05
bn in 1999 as against long term loans of Rs 28 bn, heavy interest outflows of Rs 1.99 bn
further increased the losses.

IA was found grossly deficient in realistic assessment of the manpower needs, needbased recruitment, optimum personnel utilization and abolition of surplus and redundant
posts.

FIGHTER PILOTS?

IAs eight unions were notorious for their defiant attitude and their use of unscrupulous
methods to force the management to agree to all their demands.

Strikes, go-slow agitations and wage negotiations were common.

Each had a different reason, but every strike was about pressurizing IA for more money.

From November 1989 to June 1992, there were 13 agitations by different unions.

The strategies adopted by IA to overcome these problems were severely criticized by

analysts over the years.

Analysts noted that the people heading the airline were more interested in making peace
with the unions than looking at the companys long-term benefits.

Russy Mody (Mody), who joined IA as chairman in November 1994, made efforts to
appease the unions by proposing to bring their salaries on par with those of Air India
employees.
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This was strongly opposed by the board of directors, in view of the mounting losses.
Mody also proposed to increase the age of retirement from 58 to 60 to control the
exodus of pilots.

Government however rejected his plans.

When Probir Sen (Sen) took over as chairman and managing director, he bought the pilot
emoluments on par with emoluments other airlines, thereby successfully controlling
the exodus.

Sen created Alliance Air, a subsidiary airline company where the

re-employed

people were utilized.

He was also instrumental in effecting substantial wage hikes for the employees.
The extra financial burden on the airline caused by these measures was met by
resorting to a 10% annual hike in fares.

Sen.s efforts seemed to have positive effects with an improvement in aircraft utilization
figures.

IA also managed to cut losses and reported a Rs 140 million profit in 1997-98.

But recessionary trends in the economy and its mounting wage bill pushed IA back into
losses by 1999.

Sen and the entire board of directors were sacked by the government.

In 1990s, in yet another effort to appease its employees, IA introduced the productivitylinked scheme.

Eventually, the PLI schemes raised an additional annual wage bill of Rs 1.8 bn for IA.

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It was alleged that IA employees did not work during normal office hours; this way they
could not work overtime and earn more money.

Though experts agreed that IA had to cut its operation costs. To survive the airline
continued to add to its costs, by paying more money to its employees.

In 1998, IA tried to persuade employees to cut down on PLI and overtime to help the
airline weather a difficult period; however efforts failed.

Over the years, the number of employees at IA increased steadily.

IA had the maximum number of employees per aircraft.

It was reported that the airlines monthly wage bill was as high as of Rs 680 million,
which doubled in the next three years

The Brar committee attributed this abnormal increase in staff costs to inefficient
manpower planning, unproductive deployment of manpower and unwarranted
increase in salaries and wages of the employees.

Analysts criticized the way posts were created in IA.

In 1999, Six new posts of directors were created of which three were created by dividing
functions of existing directors.

Thus, in place of 6 directors in departments prior April 1998, there were 9 directors by
1999 overseeing the same functions.

Analysts pointed that in the case of cabin crew, 40 posts were introduced in the Southern
Region on an ad-hoc basis, pending the assessment of their requirement by the Staff
Assessment Committee.

Another problem was that no basic educational qualifications prescribed for senior
executive posts.

Even a matriculate could become a manager, by acquiring the necessary job-related

qualifications & experience.

Illiterate IA employees drew salaries that were on par with senior civil servants.

After retirement, several employees were re-employed by the airline in an advisory

capacity.

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With each strike/go-slow and subsequent wage negotiations, IAs financial woes kept
increasing.

Though at times the airline did put its foot down, by and large, it always acceded to the
demands for wage hikes and other perquisites.

TROUBLED SKIES

Frequent agitations were not the only problem that IA faced in the area of human
resources.

There were issues that had been either neglected or mismanaged.

Various allowances such as out-of-pocket expenses, experience allowance, simulator

allowances etc. were paid to those who were not strictly eligible.

Excessive expenditure was incurred on benefits given to senior executives such as

retention of company car, and room air-conditioners even after retirement. All these
problems had a negative impact on divestment procedure.

Privatization was expected to give the IA management an opportunity to make the

venture a commercially viable one.

Freed from its political and social obligations, the carrier was expected to be in a much
better position to handle its labour problems.

The biggest beneficiaries would be perhaps the passengers, who would get better services
from the airline.

Indian Airlines Performance.

The airlines response to the emerging competitiveness in the open market in 1999 was
eminent with the decision to undertake various initiatives to rebuild its image.

It was successful in its initiative and was even rewarded with increase in revenues.

This however couldnt be sustained by the airline and its revenues started sliding
downwards.

Unable to match the services and sustain improvements the airline was criticised for its
inefficiencies and excessive expenditure on human resource.

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The organisation started to face frequent losses which amounted to Rs 7.5 billion in
1999.

Failures in Competition

The airline failed in its image rebuilding initiatives where in the contributing cost of the
human resource spiralled out of tolerance levels.

The inefficiencies and expenditures were attributed to the organisations growing losses.

Staff cost increased alarmingly to Rs 5.9 bn during 1994-98 period.

Although many private companies were vanquished, those which went on to eat up IAs
market share.

This was evident by the fact that in 1999 IAs share was 47% where as that of private
airlines was of 53 %.

These failures could also be attributed to the unnecessary interference by the civil
aviation ministry which neither had the necessary competence or expertise to take
intricate decisions.

The decision making interference ranged from deciding on the crews quality to major
technical decisions.

More than required beaurcratic involvement in the organisational affairs was responsible
for the failures.

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The fulfilment of social objective by the organisation of connecting the north-eastern

regions with the rest of the country also contributed to the already heaping losses.

Heavy interest outflows and large debts can be attributed as a major contributor to the
huge losses.

Unorganised and unplanned human resource were also responsible for

the

ever

increasing costs and inefficiencies.

Basic human resource management concepts were not followed that led to unplanned
manpower.

Inefficient Manpower planning can mainly be attributed as the prime reason for the
presence of surplus and redundant posts.

Inefficient in manpower planning, rocketing cost of human resource, social obligations,

too much beaurocrat and political interference, huge interest flows and incapability of
maintaining the improvements in combination fuelled the failure of the airline in the open
competitive market.

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CONCLUSION

The World Competitiveness Report rated Indias human resource capabilities

as being comparatively weaker than most Asian nations. A dramatic shift in
recruitment practices has been taking place as globally pretend Indian companies
as well as global technical services rivals have made India a battlefield of
recruitment for the best workers. The recognition of world class human resource
capability as being pivotal to global success has changed Indian HRM cultures in
recent years. While the historical and traditional roots remain deeply embedded in
the subjective world of managers, emphasis on objective global concepts and
practices are becoming more common. Three very different perspectives in HRM
are evident. Firstly, Indian firms with a global outlook; secondly, global firms
seeking to adapt to the Indian context; and thirdly, the HRM practice in public
sectors undertakings (PSVS). As the Indian economy becomes more globally
linked, all three perspectives will move increasingly towards a cross verging
strengthening. Interestingly, within the national context, India itself is not a
homogenous entity. Regional variations in terms of industry size, provincial
business culture, and political issues play very relevant roles. The nature of
hierarchy, status, authority, responsibility and similar other concepts vary widely
across the nations synerging system maintenance. Indeed, organisational
performance and personal success are critical in the new era.

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BIBLOGRAPHY
Google.com
blogs.oneindia.in/24058/15/2/showblog.php
www.management-hub.com/hrmanagement9.html
www.allbusiness.com/human-resource-management/3131796-1.html
Business Today magazine, Jan 10 issue
Money Today, Anniversary issue

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