People Management Strategy for

Building a Global Workforce

in the “New” India

Debi S. Saini (debisaini@mdi.ac.in)

Professor & Chairperson—HRM Group
Management Development Institute, Gurgaon

Presentation made at
Boston College Global Workforce Roundtable Inaugural Summit
September 26-29, 2006; London, U.K. at GSK House, London
Session Title: Recruitment and Retention of a Multicultural Workforce

1
 Young
Potential

For Retaining Talent, also Recognize the Individual

Diversity of the Young & Senior Employees 2
This presentation deals with the following:
• India’s Demography: Some Basic Features

• India’s Promise & Potential as a Business Hub

• Some Problematic Issues: General & HR related

• Theoretical Framework of People Management Strategy (PMS)

• How PMS is being used to build a Great Place to Work

(Key thesis: Intertwine individual diversity with Group Diversity)
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 India:
Some Basic
Demographic Features

4
 India’s Rich Heritage (1/3 GDP 500
yrs ago)

“I have traveled across the length

and breadth of India and I have
not seen one person who is a
beggar, who is a thief.  Such
wealth I have seen in this country,
such high moral values, and
people of such caliber… the very
backbone of this nation, which is
her spiritual and cultural
heritage….."
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India: Unique Features
• Population 1100 m. (Sept, 2006)
• 531.3m. males; 495.7m. Females
• Expected: 1.4 b. by 2025 1.6 b. by 2050
• Territory: about 2.4 % of world
• Literacy: (7 yrs. +): 65.38 %
• 70% people live in 550,000 villages
--Rest in 200 cities/towns
• 28 States; 7 Union Territories
•179 languages (18 official); 544 dialects
• Agriculture base, high poverty
• Caste/hierarchy influence mgt.
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• 20% people are English-speakers
Globalization Has Led to
Emergence of New India

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Globalization: Location Economies in the New Era
Assembly
Creating a Global Web

Sales
Sales Parts

Sales

Advertising

Parts Parts Parts

Design
8
 Like these ducks, MNCs and Indian companies are
exploring the world around them for comfortable habitat 9
 Global & Indian Corporates are
trying to be competitively better &
Global Leaders in the turbulent
Business Environment

The intensity of this

will be far greater
in time to come as incidence
of turbulence will increase

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What should then be Done to Survive & Excel
“You can not change the direction of the wind, but you can
always adjust your sails”

People management strategy & diversity

management are seen enablers in this
direction 11
 New India in the
Global Economy:
Promise, Potential & Concerns

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 Goldman Sachs Report of October, 2003:
“Dreaming with BRICs: The path to 2050”
India’s Total GDP today : $ 690 B. (Rs. 31,055 B.)
[It is 4th largest economy: $2.6 Trillion (in purchasing power parity)]
India's GDP will reach $ 1 trillion by 2011 & later as follows:
$ 2 trillion by 2020, $ 3 trillion by 2025,
$ 6 trillion by 2032, $ 27 trillion by 2050
• Becoming 3rd largest economy after USA & China in $ terms

• In terms of GDP, India will overtake:

-- France by 2019, -- UK by 2022 -- Germany by 2023 -- Japan by 2032
Today:
• Indian economy is 12th in GDP in $ terms & 4th in purchasing power parity
• Share of India in world trade is 1% (till some time back it was 0.54 %)
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 Workforce/GDP Contribution in the
Three Sectors as per 2001 Census of India
Sectors Percentage of Percentage
Workforce Employed Contribution to GDP

Agriculture 57 % 22%

Manufacturing 20% 24%

Services 23% 54%

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Trend in Labour Force Employment in India No. in Millions
Year 1981 1991 2001 2003
Total Population 679 839 1019 1055
-- (2.4) (2.1) (1.7)
Total Labour Force 292 358 412 426
-- (2.26) (1.5) (1.6)
Total Employment 286 351 403 422
-- (2.27) (1.5) (2.4)
Unorganized Sector 263.3 324.3 375.2 395
Employment -- (2.32) (1.6) (2.6)
Organized Sector 22.7 26.7 27.8 27.0
Employment -- (1.8) (0.4) (-1.4)
Public Sector 15.6 19.1 19.1 18.6
-- (2.2) (0.0) (-1.3)
Private Sector 7.1 7.6 8.7 8.4
— (0.7) (1.4) (-1.7)
(Figures in brackets are average annual rate of growth) Source: Economic Surveys of India.
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Classification of Indian People on Income Basis (Rough)

About 250 million About 200 million

Rich, Upper Middle & Lower Middle Class

Middle Class

About 400 million About 250 million

between Lower Middle & Below Poverty Line
Poor Class

Between 1$ and 2 $ a day > 1 $ a day

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Attraction of India as Outsourcing Hub: Survey

Survey of 200, mostly 500 Fortune, cos. sponsored by Fuqua

School of Business, Duke University, USA, revealed:

They are likely to send work to following countries:

• India (69 percent);
• China (8 percent);
• the Philippines (5 percent);
• Latin America (5 percent);
• Eastern Europe (4 per cent); and
• the Caribbean/Mexico (2 per cent).

The work included: call centres, research, engineering

services and HR functions (Silverthorne, 2005).
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India: Some Growth/Development Indicators

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

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

3. Debate on globalization: Concluded in its favour

4. Boom in BPO/IT and ITES industries

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

[Cars: To have 36 times more cars in 2010 than what it had in 1990]
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 Education System and Skills in India
• The Education based on British system

• One of the largest “higher education systems in the world”

--More than 7 million graduates every year
-- 3.1 million join the workforce each yr.

• 20% of the population speak English (About 200 m.)

--More English speakers in India than in England

• India emerging the back office capital of world (IT & ITES)
--Today they employ about 1 million people 19
 Some Concerns for Business
1. Problem of professionalism
2. Hierarchical mindsets (Caste accentuated this)
3. Bureaucratic mindset/public corruption
4. Lack of process sensitivity
5. Sense of collective paralysis
6. Lackadaisical attitude to time
7. Labour law rigidity
8. Lack of safety consciousness
9. Inadequate infrastructure
10. Slow judicial & administrative processes
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Problems in Developing Global HR Practices in India
• Power distance is high: Internalizes inequality in society
--Hierarchy/status consciousness: Acts as tool of control

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

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

4. Low masculinity: So orientation is to personalized relationships

--Rather than towards performance:

5. Fifth Dimension: Long & short-term orientation

--Traditionally, India is long-term oriented; but globalization making it short-termist

HR policies of MNCs influencing HR practices of Indian cos.

--Professional customer handling by Citibank influencing PSU banks
--e.g. de-layering has taken place in Indian orgs. such as ICICI 21
 In Defense of Theory
People Management Strategy (PMS)
for Developing
Global Workforce

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Dave Ulrich, Human Resource champions,
(Harvard University Press), p. 237
“CK Prahlad, a world renowned professor of strategy, meets
frequently with groups of HR executives. He claims that one
reason HR has not become pivotal to business as it should
be is that HR often lacks knowledge of theory. Theory
explains why events happen. Theory provides
explanations based on logic for how events relate to each
other. Theory weaves individual events into predictable
and generalizable patterns.

To make HR practices more than isolated acts, managers

and HR professionals must master the theory behind HR
work; they need to be able to explain conceptually how and
why HR practices lead to their outcomes.”
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 HR’s Role in Building the 4+2 Org
Wiliam Joyce, Nitin Nohria, & Bruce Robertson

• They started looking for WHAT REALLY WORKS in 1997

—Found the following 4 reasons for managerial failure
• Limited resources
• Separating theory from practice
• Relying on pre-conceived truth about success
• Underestimating the difficulty of the problem
They developed a book to avoid these problems: It
— Claims to be largest study of its kind
— Analyzed 60,000 pages of info. from 200 firms in multiple industries
— Involved interviews of journalists, executives, & Wall Street analysts

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Important of Theoretical Frame

Baruch Lev
talked of
Intangibles
of the
organization
that determine
share prices Dr. Baruch Lev
Professor of A/c & Finance
New York University
Stern School of Business 25
 Theoretical Frame of Soft HRM
Model and HRM Strategies
These Soft Strategies Include

• Diversity management

• Building a great place to work

Michael Beer
Emeritus professor
Harvard Business School
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 Theoretical Frame of
Diversity management

Managing Diversity

Michalle Mor Barak

Sage, Thousand Oaks, 2005

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 What is HRM Strategy?
• It is a philosophy of people-mgt:
Identify & enforce behaviour

• It aims at Competitive advantage

• Uses traditional & new interventions

• PM & IR subsumed in HRM: Helps dilutes Unionism

• HRM strategy is the Single most imp. Consultancy Area

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 A Model of Shift to HRM Philosophy

Beliefs and
Assumptions
• Attitude and
Behavior changes
Line • Commitment
Managers • Customer Competitive
ENHANCED STRATEGIC
seize the orientation Performance
COMPETITION RESPONSE
initiative • Quality
• Flexible working

Change in key
Levers

Implications for Industrial Relations

Source : John Storey, HRM 29
Soft Strategic HRM Model: Themes
• Empowerment/Involvement

• Learning organization

• Employee care: Orgl. justice

• Employee respect, fairness,

pride, camaraderie

• Diversity management
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 Hard Strategic HRM Model: Themes
• Enhanced mgt. control/Discipline

• Flexibility promotion and VRS

Some Hard Strategic HRM Themes
• Performance measurement
F. W.
Taylor

• Scientific management and rationalization

• Employing contract & casual workers

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 Need for Balancing Local & Global
• Global mindset/rationality in people mgt.

• Need to balance the local and global: Glocal

• Need to balance hard & soft aspects

• Need for benchmarking best Practices 32

 Building
a Great Place to Work
Through Strategic
HRM Practices

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 State of Strategic HRM In India
• HR not reached strategic level in India as it should be
--Though expanded a great deal in last 5 years or so

• Most Cos. trying to cope with retention: Not beyond

• HR should learn to look at the larger picture

--Not doing workplace planning & HR measurement

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

• HR mgrs admit “SHRM is need of hour but somehow are not practicing”
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Some Key Human Capital issues in India:
Study by Aneeta Madhok (2006)

1. Creating a high-performance culture

2. Retaining talent

3. Recruiting

4. From patriarchic, hierarchical to team-based, informal org. culture

5. Linking training with performance

6. Compensating knowledge workers

7. Building interpersonal relationships/ managing conflict

8. Going global
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Companies Creating Family-like Situation at Workplace

•
.
Like Tata Steel, Hero-Honda, and Sapient
--Invite family members to visit the workplace
--to see environment in which kin working

• Creates a link between home and workplace

--Family controls WM’s sentiments if unhappy
--Reminds him/her how caring is the employer

• It helped Tata Steel to retrench 29,000 excess WM

--Done over a period of 7 yrs.
--Thus it became the cheapest steel-producing co. in world.

• This strategy helped Hero-Honda remain union-free

• Honda neglected HR: serious trouble: 25 July, 2005

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Examples of Some Companies
That Practice
Soft HR and Global
Workforce Strategies

37
Building a Place of Pride and Fairness for All
Great Place to Work
Dimension How it Plays Out in the Workplace
®
Dimensions • of a Great Place
Communications to accessible
are open and Work
Credibility T • Competence in coordinating human and material
resources
• Integrity in carrying out vision with consistency
R • Support professional development & show
appreciation
Respect U • Collaborate with employees in relevant decisions
• Care for employees as individuals with personal lives
S • Equity—balanced treatment for all in terms of rewards
• Impartiality—absence of favoritism in hiring and
Fairness
T •
promotions
Justice—lack of discrimination, process for appeals
• In personal job, individual contributions
• In work produced by one’s team or work group
Pride • In the organization’s products and standing in the
community

• Ability to be oneself
• Socially friendly and welcoming atmosphere
Camaraderie • Sense of “family” or “team”
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Susken Communication Technologies, Bangalore
• Employees at Susken take pride in
--Work culture that company has created, and --The Values it upholds

• Inspiring vision: “unleashing India creativity.”

• It is a situation of complete trust and equality:

-- “No-monitoring policy” leads to transparency, freedom from fear
--No attendance system--No limit on sick leave that an employee can avail
--Freedom to employees to come and go--Freedom to think and innovate

• Same rules for all categories of people

--Same hotels when on travel
--CEO as all others fly economy class--& sits in similar cubicles as all 39
others
Classic Strips (Mfg.): Come Out of Control Mindset
• 214 WM including contract WM—Most are blue-collared
--4 WM 25 yrs. ago (in 10’ x 5’): 44 acre campus in Vasai, Mumbai

• Main motto was: “dignity at work.”

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

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

• Employee spends 2 ½ hrs every month on training (kaizen)

--Co. has a library with trade journals, magazines and books
--Most employees are with the Company for the last 15-20 yrs
--Practices Proactive Diversity: Women make 1/3rd of the workforce
--It includes handicapped people
--The Company shares with employees a %age of its annual profits40
 Mahindra & Mahindra
• Hired a Yale University-educated president of HR
--Was earlier a CEO for 2 Tata Group companies

• Now he heads 150 HR mgrs. at Mahindra & Mahindra

• He claims to be doing a lot of strategic work

• Aimed to give competitive advantage:

--Talent management
--Creating synergy--Creating a culture of integration
--Mapping
--Succession planning
--Developing a global mind-set.” (Grossman, 2006). 41
Prudential Process Mgt. Services (PPMS)
• Company with 1,200 employees: Serves Prudential UK

• Has reduced attrition to 20 % (Industry 45%)

• Strategy comprises:
--Quickly hiring good candidates--Rapidly enhances their skills
--Offers them a conducive environment; makes them stick
--Quickly zeroes in on candidates and closes the deal

• Sponsors continuing education

--After 18 months, employees are eligible for MBA programs
--Specially tailored with top-rated Indian business schools
--1/2 tuition fee paid by PPMS 42
Prudential Process Mgt. Services (PPMS) contd…
• Competes on its culture; not on compensation (Can come Drunk)

• Claims to offer a lifestyle to employee: fraternal environment

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

• Facilities like: training, mgt. education, career advancement

• Believes in building an employer brand

• Most important person next to CEO is HR chief

• Said: if HR fails to live up to expectation, be disastrous to43Co.

 Skyworks Solutions
• Reduced its attrition to 10 % (industry practice: 40 to 45%)
--For engineers in the software industry

• HR director is part of a collective group

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

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

• With HR duties runs the site from operations perspective

--Not like the one in next slide

• This is indeed a strategic function: Helps GPW

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Verghese Kurian: Father of Milk Revolution in India
45