Human Resource Management

Unit 2

Unit 2
Structure: 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Introduction Objectives HRM in India Human Relations Movement Cultural dimension of the Indian workforce Scope of HR in India Summary Caselet Terminal Questions Answers

HRM in India

2.1 Introduction
You will agree that the evolution of the Indian organizations have happened at a different pace as compared to what happened in the rest of the world. You might have read articles in magazines and on the web on the challenges that multinational company may face while doing business in a country like India.. MNC faces difficulty in setting up business in India in terms of paper work related to registration and due to laws of the land. Organization also faces a lot of challenges in hiring and retaining its employees. We will spend time in this Unit discussing what Indias challenges were and how it has overcome them to emerge a winner. The Indian story for organizational success is one that is deeply rooted in its history and culture. The Indian value system is rich in terms of joint family system and has respect for elders. The British rule along with the freedom struggle has strongly impacted the shaping of the Indian workplace. The largely agrarian nature of the countrys wealth builds hard work, dignity for labour, saving for the future and shared responsibility these are the key attributes of Indian workforce. And these attributes even today are the foundation of the success of the Indian firm. To add on this, the role of the countrys democratic governance framework with its sturdy term of Five Year Plan have enabled policy makers and the financial institutions to set the stage for Indias success. The far-sightedness of the government in the
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area of education, particularly, has contributed immensely to the control of population. This together with the assistance from the developed countries helped the country create its own value proposition globally. Unique in its strengths and its weaknesses India today is identified as among the leading emerging economic in the world sharing space with larger countries (both in size and scope) like Russia, China and Brazil. India continues to climb the curve of success even after 60 years of independence, with symbiotic trade relations with almost every other country in the world. Objective: After studying this unit you will be able to: Recall the history of Indian concepts in human resources management Identify its uniqueness as compared to the rest of the world Evaluate the impact of the countrys culture on the organizations culture

2.2 HRM in India

As it stands today the Indian organization could not have hoped for more. In addition to being strategically positioned on the corporate world map as a low-cost, highly skilled destination, the Indian corporate is emerging as a base for committed, intelligent and a knowledgeable workforce. This has been achieved by the help of a strong foundation provided by the Indian education system at the primary, secondary, technical and at professional level. It is a undisputed fact that the Indian Institute of Technology, the National Institute of Technology and the famed India Institute of Management are among the world-class institutions to name a few. Quality education and research are encouraged on these campuses and across the country, which mould and contribute to the practices in Indian organizations. The HRM practices in Indian organizations are a parody of sorts. There is a strong foundation that is a simple extension of the HR practices from the established western organizations and the developed countries. However there is a equally strong cultural impact on the hiring practices, compensation standards, benefits and statutory benefits, performance linked rewards and payout, which though in-step with international HRM practices have a flavour their own. We will discuss a few distinct differentiators that impact HRM practices in Indian organizations:
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The Indian culture is one that is deeply rooted in its societal and collectivistic values whereby there is a natural urge to collaborate at the workplace, work in teams and groups with ease. The diversity that is seen in the Indian society w.r.t. diverse religions and states are reflected in the ability of the Indian to accept diversity of views and thought without inhibitions. Not much effort needs to be expended to practice tolerance towards others points of view. The tolerance for ambiguity and uncertainty however is low in the Indian which requires a lot more detailing of jobs and roles and responsibilities. There is need therefore to establish definite boundaries of authority and responsibility. Work culture-wise, the natural ability to work hard and long hours, perseverance and the need to earn money impact the way the work is organised in Indian organizations. It is not uncommon for the Indian to compromise personal time with family / friends to instead attend to work and satisfy a customer. There is a overwhelming sense of service that manifests itself at the workplace. Availability of a large educated group of individuals of different calibre of knowledge and skill allows the country to undertake different nature of work beginning with lower skilled activities such as BPOs(Business Process Outsourcing) and moving up the value curve to far more advanced activities ....KPOs (Knowledge Process Outsourcing). Compensation and benefits costs continue to provide a competitive advantage for India making it a preferred business location the world over. There is a natural expressed need to belong. This again is typical of the Indian and has brought about a significant amount of customisation of the workplace and its norms to allow for cultural events and activities through the year. There is a lot more scope for socialising that exists in the Indian organizations. Current trend in the over populated urban part of the country are quickly fading out to tire 2 and tire 3 cities and town where the cost of living and wage levels are not as competitive, further expanding the Indian resource base for hiring and building talent, contributing to the overall gain of the country.

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HRM in India however is not structurally well-researched and hence a lack of theoretical information to track and document its progress. Unlike in the emerged countries like the USA and the UK where the research networks are mature and well established. Research is yet at its infancy in India and there is a lot of dependence on the emerged countries in emulating best practices in the way people are hired and managed. Today the organizations of Indian origin have their unique HR strategies that work best for them. Work more and earn more is a common and accepted philosophy at the Indian workplace. Work is respected and revered and almost worshipped in Indian organizations. Benefits are basic yet equitable and adequate. There is a high focus on cash in hand as opposed to benefits and perks. Our statutory and legal frameworks, as a result, are a lot more liberal and less restrictive as compared to the emerged countries. An open society drives openness at the workplace and hypocrisy is largely discouraged, leading to well structured policies and processes that drive workplace behaviour. Diversity for India is a challenge very different from its existence in the rest of the world. Diversity initiatives in India normally focus around challenges related to gender diversity. Its only in the past few years that there is a pattern of women in the Indian corporate. Today this is a key issue. There is a lot of strategising and initiatives in all Indian MNCs as well as Indian domestic firms toward wooing this critical potential talent for organizational advantage. Activity 1 Speak to your friends or relatives who are working in a public sector company or in a MNC. Try to compare the HR practices of a public sector company to a MNC. Self Assessment Questions 1. In India diversity is a concern because we are very conservative and a closed society (True / False) 2. India is gaining importance because of the quality as well as the cheap cost of living (True / False) 3. Our legal framework is very advanced, allowing for foreign companies to work easily in India (True / False)
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4. Grievance management systems is a common HRM function (True / False)

2.3 Human Relations Movement

Kautilya provides an account of the techniques of human resources management as early as 4th century B.C. in the "Artha-Shastra". As per the book, there existed logical procedures and principles in organizing labour namely the Shreni or guild system and in the principles of the co-operative sector. The wages were in terms of quantity and quality of work turned out and punishment for unnecessarily delaying the work or spoiling it. The writing of Kautilya provides an excellent discussion on staffing and personnel management, including the detailing of what today are called job descriptions, qualifications for jobs, methods of selection, employee and supervisor development, formally established incentive methods (Sarasasaama- daana- bheda- danda- catura, the Carrot and Stick approach) and even the science of performance evaluation. The guild system was pioneered and closely followed by the establishment of the co-operative sector of craftsmen and traders organizing themselves to promote their professional interests. Numerous professional societies were similarly formed each establishing systematic procedures and policies to nurture their own interests. Significantly, these practices also respected the principles of the division of labour, which can easily be traced to the caste system that even today is a inseparable part of the Indian cultural system. The society got divided into Individuals engaging themselves in activities such as teaching, sacrifice or state management were designated as Brahmins While those specialising in fighting were termed as Kshatriyas. Individuals engaged in the areas of trade, business and agriculture were called Vaishyas and Those devoting themselves in manual work were known as Shudras. Herein hereditary facilitated the transfer of skills and training from one generation to another. Quickly even specialised skills became hereditary suchas goldsmiths, weavers, potters, blacksmiths, carpenters, hunters, charioteers, snake charmers, architects, sculptors, armourers identified as separate communities by themselves. Between the employer and
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employees justice and equity laid a sound foundation for successful enterprise. During the medieval period, India experienced aggressions for around 700 years, during the Mughal rule. While trade and commerce flourished, majority of the artisans and the craftsmen remained poor and lived simple lives compounded by the large and joint family system that prevailed. Low wages, oppressive political conditions and poor physique characterised the workplace. Nothing significantly changed during the British rule. Oppression and poor working conditions prevailed in all industries and intensified in the tea estates that were the key focus of the British for obvious reasons that tea was a key export product. This prevailed till the enactment of the Factory Act of 1881. This coincided with the waves of industrialization and urban growth that India witnessed. The Act brought about the first set of formal guidelines and rules that the industries had to comply with. Workers employed in the factories were allowed a week off-day and provisions were made for supervision, quality and hours of work. Sadly the act also established the minimum age of children for employment to be seven years and the maximum working hours for them to not exceed seven hours a day and only in the day-shift. This set the stage for the organization of employees to ensure fair work and pay and in 1890, the first labour organization Bombay Mill Hands Association was established. In 1905, the printers' Union at Calcutta and in 1907, the Postal Union at Bombay were established. The Madras Labour Union was organized thereafter in 1918. The Central Labour Board was established in 1922 to bring together the different unions in the Bombay city and the All India Trade Union Congress was organized. The formal implementation of the Indian Trade Unions Act took place in 1926, one more landmark in the history of industrial relations in the country. There was a large scale expansion of the trade union movement after the Second World War - especially after the independence. The union-government interactions significantly stepped up to accommodate for the removal of the war-time restrictions on strikes, formation of three more central labour organizations and the competition among them and the use of adjudication rather than collective bargaining techniques to resolve issues. In 1960, 45 percent of the total industrial workforce was claimed to be unionised. Today, the total
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membership is estimated to be around 4.3 million i.e., 28 percent of total workforce. The post-independence period also marked the formation of the Personnel Department in different public and private sectors. Under the Factories Act, 1948, employers had to employ a Welfare Officer in a factory employing 500 or more workers. Similarly the Mines Act, 1952, empowers the Government to specify employment of welfare officer/officers. While welfare constituted a large part of the responsibilities of the Personnel department, there were other tasks and responsibilities that were assigned as well. The responsibilities included other varied functions including the employment of suitable people, workplace safety and driving awareness, training and wage and salary administration. The Personnel department however operated in a somewhat isolated manner and executed tasks as assigned by the head of the organization / core business teams. The interactions with the other heads of departments were limited and only on a need-based rationale. In the past two decades the workforce in India has evolved rapidly to emerge as a nation of intelligent, skilled and highly aware and mature professional, who stand shoulder-to-shoulder with the professional from the world over. The workplace is an equitable one which believes in the values of respect for the individual and aspiration to be the best in the world. The role of the Human Resources function can no longer be ignored or sidelined. It is viewed as a strategic partner and has found a place at the top management table. The Head of Human Resources function is selected with as much care and attention as the CEO and is consulted in all business decisions, irrespective of its direct/ indirect implications to human resources. Being a HR professional is a conscious decision that a individual takes early in his / her life and pursues it with dedication and commitment. Self Assessment Questions 5. Kautilya provides a systematic treatment of management of human resources as early as 4th century B.C. in his treatise titled . 6. From the 14th century B.C. to the latter half of the 10th century A.D., the relationships between the employer and employees were marked by...
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7. In "Varnashram" or caste system, those devoting themselves in manual work were known as... 8. During early British rule, there prevailed a ..policy towards the business. 9. The Madras Labour Union was organized in..

2.4 Cultural dimension of the Indian workforce

The foundation for understanding the unique work practices at a country level can best be understood by first understanding the cultural aspects of the countrys workforce. The pioneering work done by Dutch scientist, Geert Hofstede is a useful tool in understanding the cultural differences used to differentiate countries. He identified five cultural dimensions around which countries have been clustered. The dimensions are: power distance, uncertainty avoidance, individualism, masculinity and long term orientation. Geert Hofstede dimensions are based on research conducted among over 1000 IBM employees working globally. While there continued to be other studies like the GLOBE (Global Leadership and Organisational Behaviour Effectiveness) project and Trompenaars' Framework, Hofstedes model is most popular. Power Distance Power distance is the extent to which less powerful members of institutions and organisations accept that power is distributed unequally. Countries in which people blindly obey the orders of superiors have high power distance. High power distance countries have norms, values and beliefs that support: Inequality is good; everyone has a place; some are high, some are low Most people should be dependent on a leader, The powerful are entitled to privileges, and The powerful should yield their power. India scores 77 on power distance, indicating high power distance as a result of the inequalities both at the level of the society as well as the at the workplace. Indian organizations typically have hierarchical structures, position yields power and subordination is acceptable.

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The dimension of high power distance at the workplace can be best understood as: People dislike work and try to avoid it. Managers believe that they must adopt Theory X leadership style, that is, they must be authoritarian, and force workers to perform and need to supervise their subordinates closely. Organisational structures and systems tend to match the assumption regarding leadership and motivation Decision making is centralised. Those at the top make most of the decisions. Organisations tend to have tall structures. They will have a large proportion of supervisory personnel, and The people at the lower levels often will have low job qualifications Such structures encourage and promote inequality between people at different levels. Uncertainty Avoidance Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these. India scores 40 indicating low to average uncertainty avoidance characteristics. Countries with low uncertainty avoidance have people who are more willing to accept that risks are associated with the unknown, and that life must go on in spite of this. Specifically, high uncertainty avoidance countries are characterised by norms, values, and beliefs which accept that: Conflict should not be avoided, Deviant people and ideas should be tolerated, Laws are not very important and need not necessarily be followed, Experts and authorities are not always correct, and Consensus is not important Low uncertainty avoidance societies such as ours have organisation settings with less structuring of activities, fewer written rules, more risktaking by managers, higher labour turnover and more ambitious employees. Such an organisation encourages employees to use their initiative and
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assume responsibility for their actions. Denmark and Great Britain are good examples of low uncertainty avoidance cultures. Germany, Japan, and Spain typify high uncertainty avoidance societies Individualism Individualism is the tendency of people to look after themselves and their family only. The opposite of this is collectivism which refers to the tendency of people to belong to groups and to look after each other in exchange for loyalty. India scores 48 on Individualism, indicating somewhat low scores, therefore tending towards a more collectivistic society. Collectivist countries believe that: One's identity is based on one's group membership, Group decision making is best, and Groups protect individuals in exchange for their loyalty to the group. Organisations in collectivist societies tend to promote nepotism in selecting managers. In contrast, in individualistic societies, favouritism shown to friends and relatives is considered to be unfair and even illegal. Further, organisations in collectivist cultures base promotions mostly on seniority and age, whereas in individualist societies, they are based on one's performance. Finally, in collectivist cultures, important decisions are made by older and senior managers as opposed to individualist cultures, where decision making is an individual's responsibility. Individualism is common in the US, Canada, Australia, Denmark, and Sweden. The people of India, Indonesia, Pakistan and a number of South American countries exhibit collectivism Masculinity Masculinity refers to a situation in which the dominant values in a society are success, money and other material things. Hofstede measured this dimension on a continuum ranging from masculinity to femininity. India scores 56 tending to be closed to masculinity than feminity. In highly masculine societies, jobs are clearly defined by gender. There are men's jobs and women's jobs. Men usually choose jobs that are associated with long-term careers. Women usually choose jobs that are associated with short-term employment, before marriage. Ranking of Countries on Hofstede's Cultural Dimensions
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Table 2.1 Comparative table containing the scores

Power Country Arab countries Argentina Australia Brazil Canada Denmark East Africa France Germany FR Great Britain Greece Hong Kong India Indonesia Iran Israel Japan Malaysia Mexico New Zealand Pakistan Philippines Singapore South Africa South Korea Spain Sweden Switzerland Taiwan Thailand Turkey USA West Africa Distance 80 49 36 69 39 18 64 68 35 35 60 68 77 78 58 13 54 104 81 22 55 94 74 49 60 57 31 34 58 64 66 40 77 Individualism 38 46 90 38 80 74 27 71 67 89 35 25 48 14 41 54 46 26 30 79 14 32 20 65 18 51 71 68 17 20 37 91 20 Uncertainty Avoidance 68 86 51 76 48 23 52 86 65 35 112 29 40 48 59 81 92 36 82 49 70 44 8 49 85 86 29 58 69 64 85 46 54 Masculinity 53 56 61 49 52 16 41 43 66 66 57 57 56 46 43 47 95 50 69 58 50 64 48 63 39 42 5 70 45 34 45 62 46

Source: http://www.geert-hofstede.com/hofstede_dimensions.php Sikkim Manipal University Page No. 32

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2.5 Scope of HR in India

Contrary to these forces, in India the owner manager / government/public sector manager was an industry icon and a national hero of sorts. The Personnel Management practices were dominant of the brick-and-motor industry. Though the approach was largely welfare oriented and reactive in nature it served effectively for the large PSU organizations that built the countrys foundation. A large part of the workforce were migrant from the rural parts of the country and armed with educational qualifications that served as their passport to a secure future. Many left the country to study and pursue career overseas. This phenomenon was called brain drain and happened during 1990 through to 2005. The best of the Indian talent left the country. Per present statistics there are close to 1.7 million people of Indian origin in America according to the US Census Bureau. The Indian American median family income is $60,093, as against the national median family income of $38,885., left the country. The estimated buying power of the Indian Americans in the United States is around US $20 billion. The high income clearly reflects the advanced educational levels achieved by Indian abroad. Its only in the past 10-12 years with the immense growth on account of the IT industry that winds of change began to blow. It was largely the advent of the Information Technology era in India that brought with it the western management practices. MNCs (multinational companies) started up their operations in India. The FDI (foreign direct investment) went up steeply as the world saw the potential in the countrys human resources. India became a preferred location for MNCs primarily from the USA, followed by other developed countries. It was natural for the MNCs setting up operations in India to establish their existing and proven management practices that were successfully working in the organizations back home. It also helped them manage their business similarly. This gave birth to a new generation of management as well as HRM practices. New hiring methods, new ways of paying salaries, new employment terms and most importantly increased focus on individual performance and outcomes. There was emphasis on deliverables and linking individual and team performance to business results and success. Given the highly educated workforce there was a de-emphasis in the role of
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the trade unions. The era of the trade union dominance gave way to the new order of individual negotiated salaries and terms and clearly performance linked assessment systems. Another transformation that the Indian workplace witnessed was the focus on ethics and ethical practices in doing business. It was only fair to expect that with the weak legal system, it needed the support of the government policies and the corporate policies to beat the corruption that existed. This has significantly contributed to India emerging as a preferred destination for doing business. All of this has yielded to give way to the birth of the professional manager. Professional managers today are a critical and essential part of the Indian corporate. The professional manager brought about a shift in the culture from a highly authoritarian approach of getting work done, to a more collaborative and participative approach. In the traditional Indian culture where the child is brought up to be dependent on parents and superiors this shift was breakthrough and took its time to manifest. The entrepreneurs who earlier operated in a secure, sheltered market and hardly face challenges, were challenged by the globalization that swept in with the liberalization policies and measure brought in by the Indian government late 1995 and onwards. Despite the challenges, the Indian employee and his manager evolved. Together they stepped up to face the challenge head-on and to win not only in India but also globally. The levers of (a) low cost, (b) highly skilled, and (c) English as the medium of education and it being the corporate-language; were the key drivers that enabled the flow of global business to India. There was exponential growth in employment both directly (jobs in the international and domestic companies) as well as indirectly (as support industries like transport, catering and ancillary industries). The simultaneous investment of the government in building the necessary infrastructure did its share of providing impetus towards creating more jobs for the people of the country. Hence, human relations movement in India has evolved very differently as compared to what we see in the developed economies of the USA and the UK. What is currently acting as a limitation is the enhanced awareness on the need for research based HRM practices. While there is a lot of work happening in the Indian education system to promote this, it is going to take a while before it can create a distinct body of knowledge that is referenceable. For now the industry relies on emulating westerns HR practices and
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customizing on a as-needed basis for the Indian corporation. For the rest the Industry forums and consortiums like the NASSCOM act as a hub bringing together organizations on a regular basis to discuss challenges and share best practices and identify ways and means to overcome them together. So far this has been successful and working to the advantage of the Indian corporate. Leading MNC research and consulting firms like Mercer and Hewitt too contribute to the industry through carrying out research and sharing reports on a regular basis. The approach however remains analytical and less prescriptive. Activity 2 Identify three practices in Indian companies that you know of that are specific to the Indian culture. Think of festivals and how they are celebrated in companies.

Self Assessment Questions 10. The culture is highly __________________in character. 11. For lack of _________________, the workers cannot and do not have any say in their jobs or working conditions. 12. ___________________ here means not only the efficient sending and receiving of messages but also includes sensitivity to the understanding of feelings, attitudes and cognitions of the subordinate. 13. It was the advent of the Information Technology era in India that brought with it the _________________________ practices. 14. There was exponential growth in employment both ___________ as well as ______________.

2.6 Summary
o HRM in India has been impacted both by its own history as well as multinational companies that came and established their operations in the country. The countrys culture has played a critical role in building value for the country globally.

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o o o o o

The caste system and the way it was structured to differentiate between different categories of jobs remains a basic framework for the way work is distributed at the workplace. The coming of the British to India and their administrations brought immense insights into the country on how to manage labour and work. It also gave rise to the trade unions and workplace equality issues. The impact of the World War I and II made their own impact on the Indian organizations. The early days of structured HRM activities were largely hygiene related and focused on the Personnel management principles. Human Resources management as it is practiced today is a outcome of the cultural (local) as well as the global MNC policies.

2.7 Caselet
Indian tech tries to retain top workers By Jessica Mehroin Irani At a time when most IT companies are reducing employee numbers to cut costs, tech majors such as Wipro, TCS and Infosys are rechanellizing their manpower. Sabbaticals are more common and people on the bench are being asked to undergo longer and more rigorous training programs. Wipro has asked some of its non-billable and skilled employees to move to subsidiary Wipro Infotech on the same pay package as earlier; but they will continue to be on the payrolls of Wipro Technologies. "These are not under performers, but talented people we don't want to lose. The move to Infotech is currently for a year, and this will give them a chance to be productive," said Pratik Kumar, Wipro executive vice president of human resources. This will also help the company in sustaining high utilization rates. The other option given to employees, who have been on the bench for over six months, is a special program which allows them to come to work for 10 days a month, at half their salary. "This allows them to take up certification programs, work on innovation projects and help in creating question banks for domain specific internal tests," said Kumar. "Once we see an opening for them on a project, we will transfer them immediately."
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TCS has also put its benched employees on high-end training programs in areas such as enterprise resource planning, business intelligence and analytics. "We are building a larger skill set as we would like to be ready when the demand picks up," said a TCS spokesperson. The IT Company has also invited its employees to write research papers on technology that can be used by the company. Reducing employee numbers for saving costs is a short-term solution, said Nandita Gurjar, head of global HR at Infosys. "When demand picks up, we'll be hiring skill pools at a higher cost; there will also be the cost of extra training. Weed out non-performers, but retain talent even if they are not being utilized currently." While Infosys has said that 50 employees, at any given point of time, can take a year off and work for an NGO at half their salaries, its peer Wipro has introduced project rejuvenate where employees, across all levels, can take a year-long sabbatical and pursue their hobbies. This is not restricted to those on the bench, but also for those working on projects. Even though these people are asked to take a pay cut, it does not matter. "As long as you get to keep your job and do fun things to de-stress, a pay cut doesn't matter," said a Wipro employee.
Source: BusinessWeek, Monday, March 30, 2009 09:22 AM

2.8 Terminal Questions

1. Enumerate the growth of Human Resources Management in India and its impact on India's ethos. 2. How did the India culture impact workplace HR practices? 3. How are the early HRM challenges different from that of the current?

2.9 Answers
Answers to Self Assessment Questions 1. 2. 3. 4. False, True, False True
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5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Artha- Shastra, By justice and equity Shudras, Laissez-faire, 1918 Authoritarian, Job-opportunities, Communication, Western management, Directly, indirectly

Answers to Terminal Questions 1. Refer to 2.3 2. Refer to 2.2 3. Refer to 2.4 References 1. Personnel Management by C B Mmoria 2. Human Resources Management : Text and Cases by K Aswathappa 3. International Human Recoruces Management : Text and cases Aswathappa and Dash

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