HR assignment

Examining the relationship between the

historical past of the company and its
human resource functions of the
organization
Roll No: PGP02.032

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Table of Contents
Abstract...................................................................................................................... 4
Introduction................................................................................................................ 5
Few Examples............................................................................................................. 6
Evolution of HR with time........................................................................................... 7
Impact of culture over HR practices...........................................................................8
Evolution of HR policies in Aditya Birla Group............................................................9
Conclusion................................................................................................................ 11
Bibliography and References.................................................................................... 12

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Abstract
This paper aims to find and examine if there exists a relationship between the
historical past of the company and its human resource functions of the organization.
Several examples from India and abroad are used to illustrate the relationship
between history, founders, culture, organization structure and other HR policies.
Studies show that founders define the culture of the organization. Founders are
responsible for so called history of the organization. History is also composed of
macro and micro environment factors the company faced during its growth and
evolution stage. These all in turn have impact on the founders thinking, companys
performance
and
subsequently
the
organizations
culture.
Good HR policies and programs are only good when they fit with the
organizations unique culture, business objectives, and personality. Thus, there
exists a strong relation between the HR functions and the history of the
organization.

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Introduction
An organizations current customs, traditions and general way of doing things are
largely due to what it has done before and the degree of success it had in those
endeavours. This leads us to the ultimate source of an organizations culture: its
founder!
The founding fathers or mothers of an organization usually have a major impact in
establishing the early culture. They have a vision or mission of what the
organization should be. They are unconstrained by previous customs or ideologies.
The small size that generally the new organization has, further facilitates the
founders imposing their vision on all organizational members. The organizations
culture results from the interaction between (1) The founders biases and
assumptions and (2) What the original employees learnt from their own
experiences.
Several examples of individuals like Thomas Watson at IBM, J. Edgar Hoover at the
FBI, Frederick Smith at Federal Express and Narayana Murhty at Infosys who have
had a lot of impact in shaping their organizations culture. For instance, Watsons
views on research and development, production innovation, employee dress, and
compensation policies are still evident at IBM, even though he died in 1956. Hoover,
the original director of the FBI, has been dead for years, too, but the FBI continues
to show pieces of his prejudices and ends philosophy. Federal express
aggressiveness, willing to take risks, focus on innovation, and emphasis are central
themes that founder Smith has maintained since the birth of the company. The
values, confidence, commitment, energy, enthusiasm, hard work, passion and a
sense of sacrifice in the employees of Infosys are something that Narayana Murthy
inculcated over the years.

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Few Examples

ICICI bank: Indias second largest bank has a performance-oriented culture

focused on growth. Its organizational practices place a premium on training,
career development, goal setting and pay for performance all with the intent
of maximizing employee achievement and customer service. The company
relies on GEs storied performance curve, in which small percentage of staf
receives generous rewards while the bottom 5 % is cut from the payroll.
Growth happens only when there are diferential rewards for diferential
performers, explains ICICIs head of Human Resources.

Toyota Motor Company: Being good is not good enough at Toyota. The
company that continuously raises the bar on production efficiency has a
strong learning orientation culture- employees are encouraged to discover
and acknowledge mistakes so that the company can continuously improve.
Toyotas culture also emphasizes humility. Even as it rises to the top of the
auto industry, Toyotas leaders are hesitant to talk up their successes. Were
paranoid against arrogance, explains Ray Tanguay, vice president of Toyota
Motor and Engineering and Manufacturing North America. Not good enough
are key words for us.

McDonalds: Ray Kroc began, what became the ten-thousand-plus McDonalds

restaurant chain on Des Plaines, Illinois, in 1955. Kroc died in 1984, but his
ideals on what McDonald stood for and tapes of his talk show appearances,
have been put together into a Talk to Ray exhibit. McDonaldss employees
can hear Kroc describe the companys basics as he defined them: A
commitment to quality, service, cleanliness, and value. Krocs ideals continue
to direct managements decisions and the company has a strong culture. He
advocated strong support for franchisees, and current management
continues this emphasis. Given present managements determination to carry
on Ray Krocs principles- after all, they built an incredibly successful
organization that sells more than $22 billion a year of hamburgers, fries and
shakes you can expect Krocs influence still to be directing McDonalds well
into the future.

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Evolution of HR with time

Fig: 1 Reactivity of HR in its evolution

As seen in the figure above the HR function evolved with time as the companies did.
It can be noted that HR functions were designed to suit the type of organization
prevalent at the time. Thus old companies with a history had to change its HR
policies too along with its structure and strategy to respond to changes in the macro
and the micro environment. Thereby, proving a direct relation between the HR
policies and the history of the company.
Human resources issues are widely neglected in small or emerging firms. It's not
because entrepreneurs don't care about staffing. Rather, most founders of highgrowth businesses have a background in sales, finance or engineering, which can
lead to an under appreciation of the HR function. As the company grows in size, the
manager/leader recognizes the importance of HR practices and thus HR functions
are introduced/modified. The company size and structure are some of the other
factors which change as the companies grow and evolve and impact the HR
functions.
This is especially necessary today as the companies fight with each other to retain
and attract the best talent. Employee pool has been recognized as one of the
factors which can make or break the company.

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Impact of culture over HR practices

Managing human resources in organizations requires understanding of the influence
of both the internal and the external environments of organizations. The internal
environment is represented by the enterprise or institutional culture (e.g. market
characteristics, nature of industry, ownership status and resource availability) as
well as the socio-cultural environment (e.g. paternalism, power distance etc.) Both
of these environment forces are in turn influenced by physical and the socio-political
context (e.g. ecological, legal, social, political, and historical forces). The Model of
Culture fit as proposed by Kanungo and his associates asserts that both the socio
cultural environment and the enterprise environment afect internal work culture
and HRM practices.
The term culture is defined as common patterns of beliefs, assumptions, values and
norms of behavior of human groups (represented by societies, institutions and
organizations.) In other words, cultural variables that may influence HRM practices
can manifest at three diferent levels.
At the most basic level, organization culture operating within the organization, is
construed as a pattern of shared managerial beliefs and assumptions that directly
influences HRM practices.
These managerial beliefs and assumptions relate to two fundamental organizational
elements: the task and the employees. Managerial assumptions pertaining to the
task deal with the nature of the task and how it can be accomplished; those
assumptions pertaining to the employees deal with employees' nature and behavior.
Managers implement HRM practices based on their assumptions about the nature of
both the task and the employees. However, these managerial assumptions are
shaped by two other levels of cultural forces.
On the one hand, task driven assumptions are influenced by the institutional level
culture as shaped by the enterprise characteristics including ownership status
(private versus public sector), industry (e.g. service versus manufacturing), market
competitiveness, and resource availability (e.g. human and technological
resources). On the other hand, employee-related assumptions are influenced by
characteristics of the societal level culture, which is conceived as shared value
orientations among people in a given society. A significant amount of research has
been devoted to the identification of salient value dimensions.
The underlying rationale is that the internal work culture refers to shared
managerial beliefs and assumptions about employee nature and behavior, whereas
the socio cultural environment refers to managerial perceptions of shared values
among people with respect to how a society is structured and how it functions. In
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addition, the internal work culture consists of two sets of managerial assumptions,
employee related and task related, each of which is influenced by diferent forces
(i.e. perceived socio-cultural and the enterprise environment, respectively).

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Evolution of HR policies in Aditya Birla Group

An interesting example is of Aditya Birla Group. After the sudden death of Aditya
Vikram Birla in 1995, Kumar Mangalam Birla (Mr. Birla) started shaping, reshaping,
and redesigning his companies relentlessly. As the company wanted to be an MNC
and not an Indian company with international presence.
The company had old practices, which suited the previous times such as:1. Babu culture, where the head of the company is always looked for direction
and decisions and considered as a fatherly figure.
2. There was no fixed retirement age. Loyalists stayed on with the company as
many years as they could work and be of help to the company (similar to the
age-old Japanese system). When they were not in a position to work anymore
they would request the babu (head of the company) to guarantee a job in the
company for their children.
3. There were guaranteed jobs for family members in the Group. This job policy
was usually used as a backup job when one of the sons of the family was not
bright.
4. The company followed the pratha system which was a manual system suited
for relatively small production systems for determining input costs such as
plant capacity utilization, energy consumption vis--vis daily cash profits as
compared to budgeted profits. Kumar Mangalams grandfather G. D. Birla had
developed the system of accountability based on pratha. This system was no
longer suitable for the vision, Mr. Birla had for his company as the company
had grown very big in size and complex tracking systems were required.
Kumar Mangalam had to get rid of a lot of old senior employees and restructured
the complete business into 20 major SBUs (Strategic business units) whose
heads were independent to run their companies but were answerable to him.
The company had entered many business due to the advantages ofered by the
license Raj but now the company had to be competitive in international market.
The growth he wanted, required the next push to be on the people front. In 2002
the Group created a fast track management talent pool that identified more than
200 performing managers. For providing systematic and structured processes for
career growth, the HR trained managers as job analysts and job evaluators. In
total 5000 jobs were assessed which resulted in formation of 11 distinct job
bands. The HR Department also continued to enhance the quality of the systems
and processes that embraced the employees engagement with the organization.
New initiatives were instituted to enhance employee well-being, particularly in
training, succession planning, health care, educating their children, and other
critical aspects that would have a significant bearing on employee performance.
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Consistently, the Group also hired seniors managers at all levels. The HR
department also established a Group Management Trainee Scheme that helped
recruit entry-level managers from reputable business schools and academic
institutions. To track employee satisfaction, the Group introduced the process of
Organizational Health Survey.

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Conclusion
As seen by the various examples and evolution of HR practice with time, it can be
easily concluded that history of an organization has a huge impact on HR functions.
The history of the organization represents how the company evolved and what
strategies worked for it and what failed. As the company evolves the HR function it
needs, changes with the structure, size and culture of the organization.

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Bibliography and References

1. http://www.cathyfyock.com/Assessing.htm
2. Som, A. (2010) Emerging human resource practices at Aditya Birla Group.
Human resource management, 565.
3. Robbins, S.P. and Mathew, M 2011, Organization theory Structure, design and
applications, 3rd revised edition, Pearson, New Delhi, India. pp. 294
4. Mcshane, S.L. and Glinow, M.A.N and Sharma, R.R 2011, Organization
behavior, 5th edition, Tata Mcgraw Hill, New Delhi, India. pp. 524
5. Aycan, Z and Mendonca,M (2000) Impact of culture on Human resource
management practices: A 10 country comparison. Applied Psychology an
international review, 3-5.

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