Example Of_Different HR Practices

Published on July 2016 | Categories: Documents | Downloads: 40 | Comments: 0 | Views: 522
of 33
Download PDF   Embed   Report

Comments

Content


HRM Case Studies
HRM Case Study

Case 1:Cirque Du Soleil's Human Resource Management Practices
Introduction
In April 2004, Montreal, Canada-based Cirque du Soleil (Cirque)2 had to pay US$ 600,000
to settle an HIV discrimination case against it. A performer with Cirque, Matthew Cusick
(Cusick), filed a discrimination complaint against the company in the federal court after he
was asked to leave as he was tested HIV+ve. This settlement mandated that the anti-
discrimination policies of the company should be revised and all the employees should be
provided anti-discrimination training. Talking about the incident, Suzzane Gagnon (Gagnon)
Vice President, Human Resources, Cirque, remarked, "It's too bad that it did happen, but I
think we have better management practices today.

Following this settlement, Cirque worked hard to ensure that its reputation remained
untarnished by the incident. The HR department was given training on the prevailing
discrimination laws and the responsibilities of the employers. All the employees spread
across the world were educated about HIV and other diseases by experts in the field.
The case proved to be an eye opener for Cirque, which had always had a reputation of being
an undiscriminating, gay-friendly organization. Commenting on the case, Hayley Gorenberg,
Cusick's attorney, said, "The case called (Cirque's gay-friendly image) into question for a lot
of folks, and justifiably so.

But Cirque showed a certain willingness on their part to be fully engaged in making the
changes that they need to make."4 As a result of the case, Cirque came up with new HR
policies and practices. Cirque, an entertainment company, had shows combining several
entertainment elements like traditional circus, ballet, opera, and theater. The company
organized both permanent shows and touring shows.

Cirque had changed the face of circus with its innovative practices. As of 2007, 3,000 people,
with average age of 35 years, from more than 40 countries were employed with Cirque. To
manage such a diverse workforce, it had a dynamic HR team which had to be 'constantly on
the move'.
Talking about how difficult the HR task at Cirque was at times, Gagnon said, “Guy Laliberte
(Cirque du Soleil's founder) says that we reinvented the circus. But sometimes you have to
reinvent HR.”5In a span of over two decades, Cirque which began as a small company with
73 performers, had spread its operations across the world. The company had two regional
offices at Amsterdam and Las Vegas in addition to the headquarters in Montreal.
As the company grew, Cirque had to undergo a complete paradigm shift when it came to
recruitment, training, and even planning out HR policies for its employees.

For instance, in early 2005, Sylvain Carrier (Carrier), Director – Compensation, Benefits, and
HR Systems, and his team reviewed and revamped Cirque's group insurance system. For this
purpose, they had to measure the liabilities and risks of general insurance and human capital.
They wanted a consistent insurance policy and insurance provider for all employees of the
company. However, this was very difficult to achieve because of the global spread of the
Cirque employees and so the company decided to differentiate its insurance coverage on the
basis of four geographical locations – the International Headquarters in Montreal, the Las
Vegas office, the Amsterdam office, and the touring shows (all tours grouped as one
location).
Such a policy ensured that the performers got satisfactory coverage, wherever they were
located in the world. Cirque was quite clear that it wanted only the best talent as its
performers...
Background Note
In 1980, Gilles Ste-Croix (Ste-Croix), with skills in stilt-walking , along with some
performers founded Les Echassiers de Baie-Saint-Paul (Les Echassiers), and began street
performances. Soon Laliberte and Daniel Gauthier (Gauthier) joined the group. In the same
year, Gauthier and Ste-Croix planned to turn Le Balcon Vert, a performing artists' youth
hostel that they managed into an organized performing troupe...
Recruitment and Selection
Cirque's management believed that the company was as good as its employees. However,
they did not have any predefined rule that only experienced people would be selected. While
recruiting new employees, five major attributes were evaluated – creativity, commitment,
responsibility, team-play and passion.
Only the quality of people mattered. Gagnon said, “The two owners of this company started it
because no one would give them jobs. They were too young and had no experience...
Training
Of the total, almost seventy five percent of Cirque's performers were selected from
competitive sports and then over about six months, they were trained to become artists, which
meant that other than acrobatics, they learnt to act, sing, and play music. Interestingly, Cirque
functioned without any make-up artists...
Culture and Work Environment
At Cirque, the artists were given their own space and a creative environment where they were
free to share their ideas. Cirque also provided the artists an opportunity to grow both
professionally and personally. The work place was projected as a home-away-from-home and
the colleagues were more like family members than co-workers.The artists were allowed to
bring their families along on tours. At Cirque, the work place was more like a playground.
The atmosphere was open and inviting.
Managing Cultural Diversity
Starting with Alegria in 1995, Cirque saw an influx of Chinese, Russian, Asian, French, and
English speaking artists and employees. This resulted in vast cultural gaps which made
communication difficult between artists and technicians.
It also affected the quality of the show. In an effort to overcome this problem, Cirque's HR
team undertook a basic language training program for the performers to close such gaps.
There were also many conflicts that arose due to cultural diversity.For example, the laws
regarding sexual harassment were more stringent in the US than in Canada. Kissing to greet
friends and co-workers was quite regular in Canada but could be considered a form of sexual
harassment in the US and some Asian cultures. In such cases, any complaint from an
employee would lead to the company facing legal issues.
Communication
Open and unhindered communication within Cirque was like a corporate policy which
insiders at Cirque cited as the reason for problems getting addressed and solved so quickly,
worldwide. Whenever employees had a problem or an issue they could easily write or talk to
their supervisors about it and expect the issue to be addressed...
The Future Beckons
It was important for Cirque to retain artists who were very talented and rare to find. A case in
point was the 25-year-old Brazilian dwarf, Alan J. Silva (Silva), who was spotted in Sao
Paulo. In the Las Vegas show Zumanity, Silva performed in a role especially created for him.
He performed with a female gymnast who was almost 6 feet tall. The problem arose when he
had to be replaced for a few days due to a shoulder injury. Although another dwarf was
brought in from Brazil to perform the role, it just didn't work out and so Silva's part was
removed till he was ready to perform...
1] Arupa Tesolin, "Business at the Big Top: Four Rings for Creativity and Innovation,"
August 08, 2007.
2] Cirque Du Soleil, which means "Circus of the Sun" in French is a privately held
entertainment company headquartered in Montreal, Quebec, Canada. It is estimated that the
annual revenue of the company is about US$ 600 million.
3] Cindy Waxer, "Cirque du Soleil's Balancing Act,"
www.workforce.com, January 2005.
4] Cindy Waxer, "Cirque du Soleil's Balancing Act,"
www.workforce.com, January 2005.
5] Cindy Waxer, “Cirque Du Soleil's Balancing Act,”
www.workforce.com, January 2005.



Ritz-Carlton's Human Resource Management Practices and Work Culture: The
Foundation of an Exceptional Service Organization
"We believe that to create pride and joy in the workplace, you must involve the employees.
And you create that pride and joy by making employees feel like they are a part of the Ritz-
Carlton. We're here to provide service, but we're not servants. We're professionals in our
field. Everything happens because the employees are so committed."
- Theo Gilbert-Jamison, Vice President of Leadership Development at the Ritz-Carlton, in
2001 1
"It's [Ritz Carlton's culture] definitely a little cult-like. But that stuff stays behind the scenes.
Travelers just know they're getting great service."
- Laura Begley, Style Director at Travel + Leisure magazine, in 2004 2
Ritz-Carlton Tops in Training
The Ritz-Carlton Hotel Company LLC (Ritz-Carlton), the US-based parent company of the
luxury hotel chain of the same name, was ranked 1st in the 'Training Top 125 Winners' list
published by Training magazine in February 2007. The company had received recognition for
the comprehensive training program that all its employees were made to undergo in its quest
to achieve service excellence.
Ritz-Carlton, a subsidiary of Marriott International Inc. (Marriot), one of the largest hotel
groups in the world, was known for the sophisticated and elegant ambience of its hotels and
the exemplary quality of the service provided (Refer to Exhibit I for a profile of the Marriott
Group).
The company cultivated its reputation carefully, referring to its employees as 'ladies and
gentlemen,' and training them to provide high quality service conforming to the precise
specifications and standards laid out in the Ritz-Carlton Gold Standards.
The company invested sizeable resources in developing the potential of its employees (as of
early 2007, the company invested ten percent of its total payroll expenses in employee
training3).
In addition, Ritz-Carlton had built a reputation as one of the best employers in the US.4 The
company had a low rate of voluntary attrition, which, at 18 percent, was significantly lower
than the rest of the hospitality industry, where it approached 100 percent.5Ritz-Carlton was
often cited as an example of a service company that had successfully leveraged the potential
of its human resources to achieve excellence.
Although many of Ritz Carlton's competitors, like the Four Seasons Hotels6 and the
Mandarin Oriental,7 also provided great service, analysts generally agreed that there were
few hotels that could match the Ritz Carlton's level of service.

This is borne out by the fact that, as of 2007, Ritz-Carlton was the only hotel company to
have ever won the prestigious Malcolm Baldrige National Quality Award,8 as well as the
only service company to have won it twice (in 1992 and 1999).9
Background
Ritz-Carlton traces its history back to 1898, when Cesar Ritz, a Swiss hotelier, opened the
first Ritz hotel in Paris. During the course of his career, Cesar Ritz had worked in different
positions at several well-known hotels, and had definite ideas about what made a good hotel.
In line with his ideas, he designed the Ritz hotel in Paris to be one of the most elegant hotels
of the time. The hotel's design, furnishings and meticulous service made it a great favorite
with the wealthy and aristocratic members of society at that time.
In the early 1900s, Cesar Ritz opened the Carlton Hotel in London, in addition to other hotels
under the Ritz name across Europe. He also set up the Ritz-Carlton Management Corporation
(RCMC) to franchise the Ritz-Carlton name and logo to interested parties who wished to
establish hotels of their own. The franchisees were required to adhere strictly to the service
and culinary standards set by the RCMC. Under the direction of the RCMC, a Ritz-Carlton
hotel was established in New York in 1910. This was followed by several other hotels across
the US and Europe.
After Cesar Ritz died in 1918, his wife continued to franchise the Ritz-Carlton name and
several new hotels were set up.
The Quest for Quality Improvement
Although Ritz-Carlton had been known for high quality service since its early days, a
systematic approach towards quality management began only in the late 1980s, after Schulze
became Vice President of Operations. By this time, Johnson's investments in Ritz-Carlton
had made it one of the best hotel chains in the US and the company had started receiving
honors from consumer organizations and travel industry groups for its service and quality.
However, despite the success of the hotel chain, Schulze was of the opinion that Ritz-Carlton
was far from excellent in ensuring complete customer satisfaction. Not only was the service
quite erratic, but even the employees did not seem to be clear about what was expected of
them.
Quality and Service at The Ritz-Carlton
Quality management was undertaken by the senior management at the Ritz-Carlton. The
President and other members of the top management formed the senior quality management
team. This team usually met every week to review product and service quality and guest
satisfaction across the chain, as well as to analyze factors like market growth and
development, profitability, and competitive status. This team played a dual role, and in its
role as the corporate steering committee, it was responsible for developing the overall
strategic plan for the company every year, as well as establishing and monitoring
performance targets.

HR Practices and Work Culture
Ritz-Carlton regarded employees as the cornerstone of its exceptional service culture. The
company understood that, as a service organization, the quality of its end product was only as
good as the people providing it. Therefore it took care to see that it not only recruited the
right kind of employees, but also provided them with the necessary inputs to enable them to
provide exceptional service.Benchmarking in Recruitment
According to Ritz-Carlton, the company did not 'hire' its employees; it 'selected' them.
The selection process was laid out very clearly, and Ritz-Carlton used what could be called
'benchmarking' in selecting ideal employees.
Orientation and Training
Ritz-Carlton invested significant time and resources on orientation and training. The
company believed that a comprehensive training program was necessary to instill its values in
employees and educate them about its service standards.
Ongoing Training
After the first year, employees received an average of 100 hours of training every year. Equal
importance was given to imparting technical skills and helping employees assimilate Ritz-
Carlton's culture. The company conducted workshops and classes on a monthly or quarterly
basis on subjects like 'Appreciating Individual Differences,' 'Planning and Running Team
Meetings,' 'Assessing Your Co-worker's Performance,' etc.

Employee Empowerment
All employees of the company, regardless of position or rank, were empowered to spend up
to $2,000 of the company's money to correct a problem or handle a complaint, without having
to ask permission from a superior.
Cultural Impact
Analysts were of the opinion that although Ritz-Carlton's salaries were not significantly
higher than those of other comparable organizations in the hospitality industry, the company
was a preferred employer because of its organizational culture and the way it treated its
employees. Ritz-Carlton's organizational culture not only helped the company provide
exemplary customer service, but also created an atmosphere where employees felt valued...
A Cultural Shift
In mid-2006, Ritz-Carlton initiated what analysts called a 'cultural shift' to make the hotel and
the customer experience it provided more contemporary. The initiative was reportedly
prompted by the realization that Ritz-Carlton's customer profile had changed significantly
over the years, and that the hotel's adherence to an extreme degree of formality was likely to
put off the new breed of customers. (The average age of a Ritz-Carlton guest had come down
from 59 years in the mid 1990s, to 47 years by the mid 2000s)...
1] "The Ritz-Carlton Company: How It Became a 'Legend' in Service," Corporate University
Review, January/February 2001.2] Duff McDonald, "Roll Out the Blue Carpet," Business
2.0, May 2004.3]"Ritz-Carlton: Redefining Elegance," Training, March 01, 2007.4] Ritz-
Carlton's parent Marriott was ranked as one of the '100 Best Companies to Work for in the
US' by Fortune magazine in 2007.5]"Ritz-Carlton: Redefining Elegance," Training, March
01, 2007.
6] Four Seasons Hotels, founded in 1960, is a Canadian-based international five-star luxury
hotel chain serving the higher end of the hospitality market. As of mid-2007, the chain
operated more than 70 hotels in 31 countries.
7] The Mandarin Oriental Hotel Group is a part of Jardine Matheson Holdings Limited, an
MNC headquartered in Bermuda. The hotels are managed by the parent company, Mandarin
Oriental International Limited. As of mid-2007, Mandarin Oriental operated more than 35
hotels around the world.
8] The Malcolm Baldrige Award is given by the President of the United States to businesses
(manufacturing and service) and to education, healthcare and nonprofit organizations that
apply and are judged to be outstanding in seven areas: leadership; strategic planning;
customer and market focus; measurement, analysis, and knowledge management; human
resource focus; process management; and results. The award is named after Malcolm
Baldrige who was the Secretary of Commerce in the US from 1981 to 1987. Baldrige was a
great proponent of the quality movement in the US. The US Congress created the award in
his name after his death in 1987. The Baldrige Award is often compared to the Deming Prize
in Japan.9] Matt Damsker, "Fit for the Ritz," www.talentplus.com, March 2004.
Recruiting - The Cisco Way
"Our philosophy is very simple - if you get the best people in the industry to fit into your
culture and you motivate them properly, then you're going to be an industry leader."
- John Chambers, CEO, Cisco Systems, in September 1997

Introduction
In 1995, global networking major, Cisco, found that despite hiring an average of 1,000 people
every three months during the year, the company still had hundreds of openings. The
recruitment pressure further increased the following year, when Cisco hired more than 1,000
employees every quarter - around 10% of the total jobs generated through the Internet in
Silicon Valley1. When Cisco's sales soared to $ 6.4 billion in fiscal 1997 and profits to $ 1.4
billion, (a 53% increase over the previous year), the company had to double its workforce and
at the same time hire the best people. The Cisco management realized that it had to adopt
innovative recruitment measures to get the best people and remain the leader in the Internet
era.
Foremost among these was the first of its kind online recruitment called the 'Friends
program'. Michael McNeal, Director, Corporate Employment said, "Friends is designed to put
some grace into the hiring process." Cisco recruiters also began to target passive job seekers,
who were content and successful in their existing jobs.
Analysts said that Cisco had maintained its lead in the global infotech industry, largely due to
its streamlined and modernized recruitment policies.
In 2001, the company recruited around 40-50% of its employees through 'Make a
friend@Cisco' online program and other such initiatives.
Background Note
Cisco was founded in 1984 by a group of computer scientists at Stanford, who designed an
operating software called IOS (Internet Operating System).
This software could send streams of data from one computer to another, which was loaded
into box containing microprocessors specially designed for routing. This machine, called the
router, made Cisco a hugely successful venture over the next two decades (Refer Table I for
Cisco's growth).
In 1985, the company started a customer support site from where customers could download
software over FTP2 and also upgrade the downloaded software. It also provided technical
support to its customers through emails. In 1990, Cisco installed a bug report database in its
site. The database contained information about potential software problems to help customers
and developers.
It allowed customers to know whether a specific problem was unique and if not how other
customers had solved it.
By 1991, Cisco's support centre was receiving around 3,000 calls a month which increased to
12,000 by 1992. To deal with the large volume of transactions, it built an online customer
support system on its site.
In 1993, Cisco installed an Internet-based system for large multinational corporate customers.
The system allowed customers to post queries related to their problems. Cisco also installed a
trigger function called the Bug Alert on its web site. The Bug Alert sent emails on software
problems within 24 hours of their discovery. Encouraged by the success of its customer
support site in 1994, Cisco launched Cisco Information Online, a public website that offered
not only company and product information but also technical and customer support to
customers. By 1995, it introduced applications for selling products or services on its website.
This was done mainly to transfer paper, fax, emails and CD-ROM distribution of technical
documentations and training materials to the web to save time for employees, customers and
trading partners, besides broadening Cisco's market reach.
In 1996, the company introduced a new Internet initiative, 'Networked Strategy' to leverage
its enterprise network to foster interactive relationships with prospective customers, partners,
suppliers and employees.
Recruitment at Cisco
Cisco sources revealed that the company had a policy of attracting the 'top 10-15%' people in
the networking industry. It believed that if it could get the best people in the industry and
retain them, it would remain the industry leader. According to Cisco's vision statement,
"Attracting, growing and retaining great talent is critical to sustaining Cisco's competitive
advantage."
Thus, effective recruitment was used as a powerful strategic weapon by the company. The
company began to use revolutionary techniques like the 'build-the-buzz' strategy, which was
centered on the primary market for its products, i.e. the Internet.
Cisco's recruiting team identified the candidates whom they felt the company 'should hire,'
and then figured out the way those potential candidates did their job hunting and designed
hiring processes to attract them to the company.
Cisco recruiters targeted even passive job seekers - people who were happy and successful in
their current jobs. Barbara Beck (Beck), Vice President, Human Resources said, "The top
10% are not typically found in the first round of layoffs from other companies, and they
usually aren't cruising through the want ads." Since the most sought after employees were not
accessible, Cisco deviced a strategy to lure them. As part of its strategy to attract the best
talent, Cisco changed the way it used wanted advertisements in newspapers.
Reaping the Benefits
Cisco believed that its new recruitment philosophy should also be made a part of the overall
corporate culture. By late 1999, Cisco's job page was recording around 500,000 hits per
month. The company generated a stream of reports about who visited the site and fine-tuned
its strategy accordingly. By the time the new recruitment initiatives were established, Cisco,
which was hiring approximately 8,000 people a year, received 81% of the resumes were from
the web. Eventually, 66% of the new recruitments were from the candidates who had sent
their resumes through the Cisco website.
It was also reported that about 45% of company's new recruits came from the Amazing
People program.
1] A nickname for the region south of San Francisco that has a high number of computer
companies. Silicon is the most common semiconductor material used to produce computer
chips, and hence the name.
2] Acronym for File Transfer Protocol. The most common way to download and upload (get
and put) files on the Internet. When you download something from a shareware page, you are
connected to an FTP site, and your computer and the server use the FTP to send you the file.



Unilever in India : Managing Human Resources
"I believe that people make all the difference. I learnt this very early in my career, when, as a
sales manager, I traveled from one territory to another."
- M.S. Banga, Chairman, HLL
INTRODUCTIONIn 2004, Uniliver's Indian subsidiary, Hindustan Lever Limited (HLL),
was the country's largest fast moving consumer goods (FMCG) company. The company
touched the lives of two out of three Indians and generated a combined volume of about 4
million tones and sales of Rs.10,000 crores.
In 2002, the leading business magazine, Forbes Global, had once rated HLL as the best
consumer household products company worldwide. Far Eastern Economic Review had rated
HLL as India's most respected company . HLL held a pride of place in the Unilever global
system.HLL was known for its ability to attract and develop good people. Several HLL
managers had gone on to assume senior level responsibilities in Unilever's worldwide system.
Others had been poached by MNCs, which had entered India since the 1990s. In 2003, over
60 HLL managers held top positions in different Unilever companies or corporate functions.
In the early 2000s, HLL realized it was becoming increasingly difficult to motivate and retain
its star performers as new opportunities opened up. At the same time, HLL found itself
having more people than necessary in some slots. As 2004 got underway, the top
management debated and deliberated on ways to handle the situation.
BACKGROUND NOTEIn the summer of 1888, visitors to the Kolkata harbor noticed crates
full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers".
With it, began an era of marketing branded FMCG goods in India. Lifebuoy was introduced
in 1895 and other famous brands like Pears, Lux and Vim followed. Vanaspati was launched
in 1918 and the famous Dalda brand came to the market in 1937. In 1931, Unilever set up its
first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever
Brothers India Limited (1933) and United Traders Limited (1935). These three companies
merged to form HLL in November 1956. After offering 10% of its equity to the Indian
public, HLL became one of the first among the foreign subsidiaries to do so. Unilever, which
gradually divested its stake in HLL, held a 51.55% stake in the company. The rest of the
shareholding was distributed among 380,000 individual shareholders and financial
institutions.
After India's economic liberalization started in 1991, alliances, acquisitions and mergers
became easier. In one of the most celebrated events in India's corporate history, HLL
acquired Tata Oil Mills Company (TOMCO), effective from April 1, 1993.
In 1995, HLL and another Tata Company, Lakme Limited, formed a 50:50 joint venture,
Lakme Lever Limited, to market Lakme's cosmetics and products from the stable of both the
companies. Subsequently in 1998, Lakme Limited sold its brands to HLL and divested its
50% stake in the joint venture to the company.HLL formed a 50:50 joint venture with the
US-based Kimberly Clark Corporation in 1994 Kimberly-Clark Lever Ltd, which marketed
Huggies Diapers and Kotex Sanitary Pads. Meanwhile, in 1992, another Unilever subsidiary,
Brooke Bond had acquired Kothari General Foods, with significant interests in Instant
Coffee.
The erstwhile Brooke Bond's presence in India dated back to 1900. By 1903, the company
had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was
formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition.
In 1993, it acquired the Kissan business from the UB Group and the Dollops Icecream
business from Cadbury India. Tea Estates and Doom Dooma, two plantation companies of
Unilever, were merged with Brooke Bond in the same year.
In July 1993, Brooke Bond India merged with Lipton India, to form Brooke Bond Lipton
India Limited (BBLIL). The erstwhile Lipton's links with India were forged in 1898. Unilever
acquired Lipton in 1972. In 1977, Lipton Tea (India) Limited was incorporated. Pond's
(India) Limited had been present in India since 1947. It joined the Unilever fold through an
international acquisition of Chesebrough Pond's USA in 1986. In 1994 BBLIL launched the
Wall's range of Frozen Desserts.






Human Resources Management at Wipro
INTRODUCTION
Wipro, one of India's most admired companies had grown from a small producer of cooking
oil founded in 1945, to a large diversified corporation by Indian standards: 23,300 employees,
$1,349.8 million in revenues, and $230.8 million in profits for the fiscal year ended March,
2004. Sales had increased by an average of 25% a year and earnings by 52% annually during
the period, 1999-2004.
As 2004 got under way, Wipro's senior managers looked back with satisfaction at the
company's recent financial performance. The software division had spent the last three years
restructuring itself completely so that it could start selling end-to-end solutions to customers,
instead of bidding for piecemeal projects. In quick time, Wipro had built three new
businesses - enterprise solutions, infrastructure management and business process
outsourcing that together accounted for 30% of total software revenues. These businesses
were expected to be the company's major growth drivers in the future. The main challenge
which Wipro faced was to develop the necessary human resources.
BACKGROUND NOTEPremji had gone to Stanford University, where he studied
engineering in anticipation of taking over the family business, Western India Vegetable
Products Ltd., or Wipro. In 1966, while Premji was still a student, his father died. So the 21-
year-old Premji returned home to take over the cooking oil business. Premji immediately
began to professionalize the company, hiring MBAs and giving them sufficient operational
autonomy. Gradually, Premji diversified into toilet soaps, competing with giants such as
Hindustan Lever. Later, he decided to move into hydraulic power systems.
Even as Wipro made good money, Premji continued to look for new opportunities. In 1977,
India's socialist government asked IBM to leave the country. Premji decided to get into
computer hardware. In 1979, Wipro began developing its own computers and in 1981 started
selling them.
The company licensed technology from Sentinel Computers in the United States and began
building India's first mini-computers. Premji hired managers who were computer literate, and
strong on business experience. They learnt quickly about technology and made hardware an
extremely profitable venture.
It was only a matter of time before Wipro engineers started developing software packages,
which were not then readily available off-the-shelf, for hardware customers.

After a failed effort at developing branded software packages, Wipro purchased an IBM
mainframe and began working on software projects for IBM clients in 1987. During this
period, the hardware business prospered in a market that grew at 70-80% annually between
1988 and 1995. Wipro's reputation for quality and customer service made it the first choice
for many customers in India. In the mid-1990s, however, India's branded hardware business
shrank dramatically.

Competition from unbranded PCs which were priced substantially lower, ate into Wipro's
sales and margins. Bad debts also rose.Meanwhile, Wipro's software services business was
taking off. After 1995, there was no turning back for this business. In 1998, the company
united the software and hardware divisions. As the IT business was taking shape during the
1980s and early 1990s, Wipro also expanded its cooking oil and hydraulics businesses and
diversified into other areas-baby care products, medical electronics, lighting, and finance. By
the late 1990s, Wipro had become one of the most sought after stocks in India.


Human Resource Management: Best Practices in Infosys Technologies
“Infosys' sharp and intense people focus is a natural corollary of its booming business, with
customers identifying this as a quality that often separates it from other competitors in the IT
services space"1
- Business Today on Infosys winning 'The Best Managed Company Award,' in 2005.
"We believe that people are our core assets and their empowerment is the key to scalability
and longevity. Respect, dignity, fairness and inclusiveness are essential to get the best out of
employees"2
- Nandan Nilekani, CEO, President and Managing Director, Infosys, in 2006.
"It is the energy of Infoscions3 that make the environment at Infosys exciting and
challenging. Our attention to detail, quality, speed and customer satisfaction keep us on the
top as we surf successive waves of change. With every step, we learn. By identifying and
fostering learnability in Infoscions, we are enabling an agile organization, at the forefront of
change.4"
- Infosys' Annual Report 2005-06.
Best Employer in India
In November 2005, Infosys Technologies Ltd. (Infosys), based in Bangalore, India, was
named 'The Best Company to Work for in India' by Business Today magazine in a survey
conducted by Business Today, HR consulting firm Mercer5, and international market
research firm TNS6 . Infosys had been adjudged the 'Best Company to Work For' in 2001 and
2002 but had lost this position in the next couple of years (Refer Exhibit I for the 'Best
companies to work for in India' from 2001-2006). In the 'Best Employer' survey conducted by
Dataquest7-IDC8 in the year 2006, Infosys was adjudged the 'Dream Company to Work for.'
Moreover, Infosys was also recognized globally and featured among the top 100 companies
in Computerworld's9 'Best Places to Work for in IT – 2006'.
For participating in this survey, the companies needed to have revenues of over US$ 250
million in 2005, and to employ 500 employees in the US. Infosys also featured in the list in
2004 and 2005 (Refer Exhibit II for some of the honors/awards received by Infosys). On the
company's HR practices, Nandan Nilekani (Nilekani), CEO, President and Managing
Director of Infosys, commented, "It is about creating a highly motivated workforce because
this is not a factory where you can monitor the quantum of output at the end of the day. But
in the intellectual business you cannot do that. So, you have to create a motivated set of
people who can operate.
Attracting the best and the brightest and creating a milieu where they operate at their highest
potential is very important. Our campus and technology infrastructure is world-class, we pay
a lot of attention to training and competency building, we try to have sophisticated appraisal
systems, we try to reward performance through variable pay. These are all part of the same
motive."10Since the early 2000s, Infosys' operations had been growing rapidly across the
world. The number of employees in the company also increased four-fold to 44,658 in March
2006 as compared to 10,738 in March 2001 (Refer Exhibit III for the number of employees in
Infosys between 1995 and 2006).
The company believed that its key assets were people and that it was important to bring its
employees on par with the company's global competitors. In spite of its rapid global
expansion, Infosys retained the culture of a small company. According to Bikramjeet Maitra
(Maitra), Head of Human Resources, Infosys, "We like to maintain a smaller company touch
and we have split the overall business into several smaller independent units of around 4,000
people each."11
Background Note
Infosys was incorporated as Infosys Consultants Private Limited12 on July 02, 1981, by a
group of seven professionals13. From the beginning, it relied heavily on overseas business.
One of the founders, Narayana Murthy (Murthy) stayed in India, while the others went to the
US to carry out onsite programming for corporate clients. One of Infosys' first clients was the
US-based sports shoe manufacturer Reebok. Infosys hired its first set of employees in 1982
from the Indian Institute of Technology, Chennai.

The HR Practices
Most of the HR practices of Infosys were a result of the vision of its founders and the culture
that they had created over the years. The founders advocated simplicity and maintained the
culture of a small company. The employees were encouraged to share their learning
experiences...
Recruitment
While recruiting new employees, Infosys took adequate care to identify the right candidates.
On the qualities that Infosys looked for in a candidate, Nilekani said, "We focus on recruiting
candidates who display a high degree of 'learnability.' By learnability we mean the ability to
derive generic knowledge from specific experiences and apply the same in new situations.We
also place significant importance on professional competence and academic excellence. Other
qualities we look for are analytical ability, teamwork and leadership potential,
communication and innovation skills, along with a practical and structured approach to
problem solving."
Training
Training at Infosys was an ongoing process. When new recruits from colleges joined Infosys,
they were trained through fresher training courses. They were trained then on new processes
and technologies. As they reached the higher levels, they were trained on project
management and later were sent for management development programs, followed by
leadership development programs...
Training New Recruits
Infosys conducted a 14.5 week technical training program for all new entrants. The company
spent around Rs 200,000 per year on training each new entrant. The new recruits were trained
at the Global Education Center (GEC) in Mysore, which had world class training facilities
and the capacity to train more than 4500 employees at a time. GEC, which was inaugurated in
February 2005 was spread over 270 acres and was the largest corporate training center in the
world with 58 training rooms and 183 faculty rooms...
Training Programs for Employees
Infosys also conducted training programs for experienced employees. The company had a
competency system in place which took into account individual performance, organizational
priorities, and feedback from the clients...
Infosys Leadership Institute
The Infosys Leadership Institute (ILI) was set up in 2001 to nurture future leaders in the
company and to effectively manage the exceptional growth that the company was
experiencing. At the Institute, the executives were groomed to handle the changes in the
external and internal environment...


Performance Appraisal
The first step toward carrying out performance appraisal at Infosys was the evaluation of
personal skills for the tasks assigned to an employee during the period of appraisal. To
evaluate the performance, different criteria like timeliness, quality of work carried out by the
employee, customer satisfaction, peer satisfaction, and business potential, were considered.
The personal skills of the employees were also evaluated based on their learning and
analytical ability, communication skills, decision making, change management, and planning
and organizing skills. Each of these criteria was measured on a scale of 1 to 5 (with 1
signifying above the expected performance level and 5 below the expected performance
level).
The Culture
Infosys tried to preserve the attributes of a small company and worked in small groups, with
decision-making remaining with those who were knowledgeable about particular processes.
The managers played the role of mentors and used their experience to guide their team
members...
The Challenges
With the IT industry growing at a rapid pace, Infosys planned to recruit around 25,000 people
in the financial year 2006-07, in order to maintain its growth. Though it had started hiring its
workforce globally, it mainly recruited engineering graduates from India. If the industry
continued to grow at a similar pace, analysts opined that companies like Infosys would not be
able to find enough people, especially with several multinationals entering India and
recruiting aggressively. To address this issue, Infosys started recruiting science graduates
with a mathematics background to create an alternate talent pool...
Excerpts >>
10] Boby Kurian, "Having Conscience is in our DNA," The Hindu Business Line, April 15,
2005.11]Rahul Sachitanand, "A Circle Sealed Thus," Business Today, November 20,
2005.12] In June 1992, the company's name was changed to Infosys Technologies
Limited.13] The group included Narayana Murthy, Nandan Nilekani, S. Gopalakrishnan, K.
Dinesh, SB Shibulal, NS Raghavan, and Ashok Arora. Ashok Arora left Infosys in 1983 to
join a US-based software company.
Human Resource Management: Best Practices in Infosys Technologies - Next Page>>
1] Rahul Sachitanand, "Infosys Technologies – India's Best Managed Company," Business
Today, March 27, 2005.2] "Scripting a Success Story," India Now, January 19,
2006.3] Infosys called its employees 'Infoscions'.4] Annual Report, Infosys, 2006.5] Mercer
Human Resource Consulting is a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc. (MMC), and is active in the areas of HR and finance related products,
advice, and services. The operations of Mercer are spread across 190 cities in 41
countries.6] TNS is among the leading market research and information groups in the world.
It is involved in collecting, analyzing, and interpreting information and in conducting
research and other services. The operations of TNS are spread in 70 countries across the
world.7] Dataquest is one of the leading IT magazines in India.8] IDC (International Data
Corporation) is a market research and analysis firm with operations spread across 50
countries.9] Computerworld is a leading global IT magazine. It is a part of the IDG network
and is published in the print and online formats.

EVA and Compensation Management System at Tata Consultancy Services
"The power of EVA is not simply the potential for staff to share the wealth creation with
shareholders and to align long-term interest. It is more importantly a mindset change towards
ownership, and is really a strategic tool to empower staff at all levels, releasing and
multiplying their energies." 1
- Ho Ching, Executive Director and CEO, Temasek Holdings2 in February 2004.
"The 'economic value added' model that we follow at TCS ensures that the compensation
packages of our employees are determined by the value they bring to the organization. The
more they deliver, the more are their rewards."
- Tata Consultancy Services, Careers.
Introduction
During the first quarter of the financial year 2005-06, about 1000 employees whose
performance was not up to the mark were asked to leave Tata Consultancy Services (TCS),
the largest IT company in India. HR experts believed that this decision was based on the
implementation of the EVA3 based model for assessing employees' contributions, at the
company.
The first two year cycle of EVA had just been completed when the retrenchment decision
was taken. Those who were asked to leave had obtained low ratings in their performance
appraisal for two consecutive years, despite being under mentorship. At a time when IT
manpower was in short supply and IT and BPO companies were going out of their way to
reduce employee attrition, TCS's decision to retrench employees made headlines in several
Indian news dailies. On April 19, 2005, TCS announced its annual results for the fiscal 2004-
05. The company declared total revenues of US$ 2.24 billion and net profit of US$ 0.51
billion. TCS had been the first Indian IT company to achieve the US$ 1 billion revenue
milestone in the fiscal 2002-03.
It continued its success story when it became the first Indian IT company to earn revenues of
more than US$2 billion per annum.
S. Ramadorai (Ramadorai), CEO & Managing Director of TCS commented, "Consistent with
our position as the pioneer of the Indian IT industry, TCS is proud to be the first IT Company
to cross the two billion dollar milestone. Through our strategic initiatives we have managed
to double our revenues in the last two years. We are alive to the challenges facing the
industry and are geared to enhance our leadership position."4 TCS aimed at earning revenues
of US$ 5 billion by 2010. The EVA compensation model was used as a basis for giving
incentives to employees and the bonus declared was a part of improved EVA achieved. In the
EVA model, the components of fixed and variable pay were determined. Fixed pay
comprised of wages and pension while the variable pay had components like bonus, profit
sharing and stock options.
1] Speech at Institute of Policy Studies Corporate Associate Lunch
www.tamasekholdings.com, February 2004.2] Temasek Holdings holds the Singapore
government's investments in companies and businesses and acts as the monitoring arm of the
ministry of finance. It was incorporated in 1974.3] EVA, Economic Value Added, a name
trademarked by Stern Stewart & Co. measures the value created by the company for its
shareholders. It helps determine the total value created after taking into account the cost of
capital. While conventional accounting methods include only the interest on debt when
calculating the cost, EVA takes into account the opportunity cost of holding equity in the
company - determined by the amount shareholders would have earned by investing in
companies with similar profiles. EVA encourages companies to review activities that give
low returns and invest in projects that maximize returns.4] "TCS - First Indian IT firm to
cross $2 b rev," www.ciol.com, April 19, 2005.
According to Ramadorai, "There's no ceiling on the bonus. It can be equal to the fixed portion
of the salary, providing the cell has shown that kind of EVA growth. It is not just
compensation, we wish our employees to also get a feeling of ownership for their own unit,
and its performance. We want each employee to feel as if they are running their business.
They have to think like entrepreneurs and know the cost attached to their business and how
will they add value to the investment."5
Background Note
TCS started operations in 1968, as a division of Tata Sons Limited, one of Asia's largest
business conglomerates, with a wide range of interests in engineering, telecommunications,
energy, financial services and chemicals. The initial journey in the IT business was not easy
for TCS. During the first two decades of its operations, TCS faced many hurdles due to the
rigid government licensing system, which made it difficult to import computers. Describing
the difficulties in doing business during those times, Ramadorai said, "It would take us two
years in India and almost a year in the US to get all the clearances we needed to import
computers. By the time we got the approvals, the model of the computer would have
changed.
Then we had to explain to Indian customs officers that model numbers don't mean much, etc.
But they would say, go back and get the license amended. On top of that, we had to pay 300
per cent import duties and give export commitments that were sometimes 250 per cent the
value of the computers we were importing. Those were painful processes. Very few
companies would have persisted through all of that."6
F C Kohli (Kohli) was the first CEO of TCS (from 1972 - 1996). In 1969, the company had
10 consultants and 200 operators who carried out IT assignments in Tata group companies.
One of the first assignments that TCS undertook was the punch card managements system for
Tata Iron and Steel Company (TISCO). One of the first projects done for external clients was
the Inter Bank Reconciliation System (IBRS) for Central Bank of India in 1969. TCS worked
on similar project for 14 other banks, and also went on to work for municipal authorities and
telephone companies. During the 1970s, TCS aimed at serving foreign clients, mainly to
improve its own systems and procedures, as the foreign clients demanded high service quality
and capability...
Excerpts >>
5] "TCS Shifts to Performance-linked Salary Structure," The Economic Times, November 27,
2000.6]"India's Software Patriarch Still a Pace-Setter," The Business Times, November 05,
2001.
The HR Policies
TCS gave utmost importance to its human resource function. The company believed in the
premise that "good ideas can come from any level of the organization and teams can do better
than the individuals."
The mission statement of HR division at TCS states, "The role of HR is to provide the
context for energizing and developing people to play effective roles in ensuring that TCS
becomes one of the top global consulting firms. Towards achieving this we will identify,
develop, facilitate, and measure the human and technological processes in the pursuit of
excellence. We will foster the values of the TATA group." (Refer Exhibit II for Vision,
Mission and Values of TCS). In TCS, the HR division acted as a facilitator. The company
had institutionalized all HR processes. TCS firmly believed that recruiting the right people
was the secret of success of any organization especially when the supply of talent was much
below the demand...
The EVA Model
TCS adopted EVA in 1999, when the company had a staff of around 15000, working at
several locations across the world. Through the EVA model, TCS aimed at creating economic
value by concentrating on long term continuous improvement.
EVA measured operating and financial performance of the organization and the
compensation of all employees was linked to it. TCS went in for the EVA as during that time,
the company was not a public limited company and hence could not have a stock option plan.
There were several people who played an important role in the success of the organization,
who needed to be recognized. As there was no wealth sharing mechanism in place, EVA was
adopted to focus on continuous improvement rather than short term goals and also to
motivate employees. Commenting on this, S Mahalingam (Mahalingam), CFO and Head
Global Finance for TCS said, "We wanted to construct a defined incentive system, which
would reward on the basis of profitability...
EVA-Linked Compensation System
In 1996, TCS was organized into a three dimensional model with the first dimension
comprising of industry practices, which included engineering, transportation and telecom; the
second dimension comprising of service practices like e-business, outsourcing, technology
consulting; while global and regional operating areas formed the third dimension.
A business unit could be a part of a service, a practice, a geographical unit or a combination
of all the three. Every unit was considered to be a revenue center and had its own EVA target.
The units that did not fall under the purview of any of these were corporate offices and
research & development, the costs of which were divided among all the units. Through EVA-
linked compensation, employees could claim stakes at three EVA levels - at the organization
level, at the business unit and the individual level. The individual was informed how he or
she could contribute to the EVA enhancement at all three levels. EVA was controlled by
revenues, capital and costs, and an individual could contribute in any or all of these areas at
all the three levels...
The Benefits
The benefits of EVA were realized across all levels in the organization. Employees became
aware of their responsibilities and their share in increasing the EVA of the unit and
organization. All the units could determine how they had fared against the targets.
The bonus banks also helped in sustaining performance from the individuals, with close
relationship between pay and performance. There was an increased sense of belonging among
the employees and the employees were motivated to increase their contribution as they were
also equally benefited by the increase in EVA. EVA was not just a performance metric but an
integrated management process aimed at achieving long term goals. One of the major benefits
of implementing EVA in TCS was increased transparency in the organization. The internal
communication within a unit had increased considerably. The decision making process
became more decentralized..
The Drawbacks
The EVA-based compensation system received severe criticism during the initial years of its
implementation. Industry analysts commented that EVA concentrated mainly on return on
investments, due to which the growth of TCS could be restricted. In 2003, TCS caused an
uproar in the IT industry when it reduced the variable salaries of employees by 10%. This
was the initial impact of EVA which was implemented in the company from April 01, 2003.
The reduction in the variable salary resulted in an overall reduction of monthly take-home
salary for most of its employees...


Human Resource Management Practices at the National thermal Power Corporation
(NTPC) in India
"I firmly believe in the idea that the basic difference between a winning company and a
losing company is the difference among their employees." 1
- C. P. Jain, Chairman and Managing Director, NTPC, in 2000.
"It's a power giant with the heart of a Public Sector Unit, but the mind of a private enterprise.
A big reason why not even one in a hundred of its employees ever thinks of leaving NTPC."
- Business Today, September 14, 2003.
"The best employers (included NTPC) inspire and maintain a passion for outstanding
achievement. They not only pose sharp focus and clarity but also share it simply and
effectively with the employees." 2
- Mick Bennett, Managing Director, Asia-Pacific, Hewitt Associates in 2004.
A Great Place to Work !
National Thermal Power Corporation Limited (NTPC), a public sector power major, bagged
top positions in several workplace surveys conducted in 2004.
It figured among the top ten 'Best companies to Work for in India' survey conducted by
Mercer HR Consulting.3 It was also ranked the third best employer for the second
consecutive year in the 'Best Employers in India' survey by Hewitt Associates.4 In addition, it
was also adjudged the third great place to work by Grow Talent Company5 in the 'Great
Places to Work' Study, ahead of companies like Johnson and Johnson, Cadbury, Philips
Software, etc. (Refer Exhibit I for the list of company rankings). This ranking was based on
an international benchmark, the Great Place to Work Trust Index, used by Fortune magazine
in preparing its '100 best companies to work for' list.
The above surveys commended the company's leadership commitment to employees; the
alignment of its HR policies with corporate strategy; its learning and development efforts; its
value-driven culture and its ability to create work-life balance for its employees.
Besides these, the company won several other awards for its HR practices (Refer Exhibit II
for awards won by NTPC for its HR practices). NTPC's website glowed with a picture of its
happy employees and a tag line that read "Generating Smiles Beyond Megawatts." The
awards did not come as a surprise to its 20,971 employees,6 whose low attrition rate of
0.17% (for 2004) also testified to their fondness and attachment to the company (Refer
Exhibit III for details of trends in attrition). NTPC had bagged top positions in these surveys
over several multinational companies operating in India. NTPC was exceptional in being the
only Public Sector Undertaking (PSU)7 that ranked in these surveys.
Analysts wondered what made NTPC so special that it could attract talent in an environment
of high paying software companies and also other multinational players operating in India.
NTPC was not only India's largest thermal power generating company but was also the sixth
largest thermal generator8 globally, and the second most efficient in capacity utilization in
the world in terms of Terrawatt hours (TWh).9 According to analysts, NTPC changed the oft-
held perception that as a public enterprise it would have a laid-back organizational culture.
NTPC had a high focus on training and development and merit was an important
consideration for career growth. Its achievement was particularly noteworthy as it had
successfully developed a challenging work culture even though it was 90% government-
owned
Background Note
NTPC was set up in the year 1975, as a thermal power generating company, with a view to
augmenting power generated by the State Electricity Boards (SEBs)10 in order to bridge the
wide gap between the demand and supply of power in the country.
At this time, the total ownership of NTPC rested with the Government of India (GoI). In the
1980s, the company established thermal power stations across the country. In 1987-88, NTPC
was among the first public sector enterprises to start a Memorandum of Understanding
(MOU) system11 with the GoI. In the year 1991, the Indian economy witnessed two major
trends, that of liberalization and privatization. The GoI encouraged the entry of private
players as power utilities. In 1991, NTPC faced a crisis with the arrears of SEB dues
increasing continuously and the World Bank12 refusing to lend further funds to the company.
The company experienced a severe liquidity crisis and employee morale had hit rock
bottom...
HR Practices at NTPC
NTPC's human resource policy has been closely aligned to its corporate vision of becoming
one of the world's best power utilities. Its HR vision was formulated with the aim of
"enabling the employees to become a family of committed world class professionals thus
making the company a learning organization."
The company identified competency, commitment, culture and system as the four pillars of
its human resource strategy. In relation to its human resource management, the company's
corporate plan stated that it aimed to "create a culture of team work, empowerment and
responsibility to convert knowledge into productive action with speed, creativity and
flexibility" and thereby gain a knowledge-based competitive edge.HUMAN RESOURCE
PLANNINGHuman resource planning at NTPC was undertaken in accordance with
organizational objectives and in line with its organizational culture...
The Power of HR: The Payoff
NTPC successfully built a culture that combined freedom with responsibility. This showed in
the scores the company got in various workplace surveys (Refer Exhibit XIII for award
details) and was also reflected in the overall performance of the company (Refer Exhibit XIV
for key financial indicators).NTPC contributed to raising the efficiency levels in the Indian
power industry as a whole.
The company's PLF of 87.5%, was well above the national average of 73%. NTPC was
ranked the second most efficient power generator in the world. Credit rating agencies
recognized the company's excellent financials, with most of its instruments enjoying high
ratings from reputed agencies like Crisil, Standards and Poor's, etc.The World Bank
applauded the company for its impressive financial management record. The Audit reports
from the World Bank stated, "NTPC has demonstrated that Government-owned power
utilities can be operated at efficiency levels comparable to those of privately owned utilities
in India and well-run utilities outside India.
NTPC's record in plant construction, cost containment and operating efficiency has been
exceptional, while as an institution it has broken new ground in organization and
management, successfully navigated the transition from constructions to operating company
and generally coped quite well with the problems of rapid expansion."...
The Future
Analysts were, however, apprehensive of whether the company would be able to maintain the
same kind of performance in the years ahead.
They pointed out that NTPC had enjoyed a near-monopoly till the 1990s but with increasing
competition from private sector players like Reliance Energy Ltd. and Tata Power Company
Ltd., it could become tough for the company to keep up its record in future. It had become all
the more important for the company to attract the best talent to be able to realize its ambitions
of becoming a complete energy company spanning thermal, hydel, nuclear and bio-power,
generating 40,000 MW of power by 2012 and entering the Fortune 500 listing by 2017. They
added that with areas like IT, banking, pharmaceuticals and biotechnology etc. in the private
sector emerging as preferred sectors for employment, the company would have to gear up to
refine its recruiting and retaining strategies.
One of NTPC's senior manager agreed, "I would not recommend NTPC for young, aggressive
fast trackers. They might end up getting disillusioned in 2-3 years time." However, others at
the company pointed out that NTPC could not allow highly accelerated career growth due to
the company's stable career policy. The company felt that job security had some advantages.It
enabled considerable stability at the company and therefore employees were stress-free and
could give their best to the company. However, the company had been taking steps to attract
people who preferred faster career growth...
Excerpts >>
8] As per a study conducted by A. T. Kearney, a global consulting firm, in 2002. 9] As per a
study (based on 1998 data) by Datamonitor, a UK based research and consulting
agency.10] Each state in India has a State Electricity Board that caters to its power generation
needs. 11] The MOU system referred to here, is a freely negotiated document between the
government as the owner and a specific PSU. It is supposed to clearly specify the intentions,
obligations and mutual responsibilities of both parties. The system attempts to move the
management of PSUs from management by controls and procedures to management by
results and objectives. 12] The "World Bank" is the name that has come to be used for the
International Bank for Reconstruction and Development (IBRD) and the International
Development Association (IDA). Together these organizations provide low-interest or no-
interest loans, and grants to developing countries. NTPC was the single largest company in
India to receive concessional loans (around $4 billion of funding from 1975 till 2005) from
the World Bank.
1]http://darpg.nic.in/content/upload/Event114.htm. 2] "TCS, Bharti, NTPC Best Employers,"
December 10, 2004, www.theeconomictimes.com.
3] Mercer HR Consulting is a global HR firm offering human resources management
software and consulting services. It conducted the 'Best companies to work for in India'
survey, 2004, in association with Business Today magazine.4] Hewitt Associates is a global
HR outsourcing and consulting firm delivering a complete range of human capital
management services. It conducted the 'Best Employers in India' survey that covered 220
major companies operating in India for 2004 in association with CNBC TV18.
5] Grow Talent Company Limited, conducted 'The Great Place to Work Study' in partnership
with The Great Place to Work Institute, Inc. of the US and Businessworld magazine. The
survey for 2004 covered 130 organizations in India.6] As of March 31, 2005 the employee
strength increased to 23,500.
7] A corporation with government ownership.




Managing Attrition in the Indian Information Technology Industry
"Our assets walk out of the door each evening. We have to make sure that they come back the
next morning."
- N R Narayana Murthy, Chairman and Chief Mentor, Infosys Technologies Limited in
2005.1
Introduction
The year 2004-2005 was another successful year for the Information Technology (IT)
industry in India with total software and services revenues recording a high of $22 billion for
the year 2004-2005 (Refer Exhibit I). The employee base also showed a whopping increase to
cross the one million mark in the year 2005. However, despite the growth in the overall
employee base, companies were struggling to retain their existing employees. Analysts
observed that managing attrition in the industry was important because skilled professionals
formed the crux of this knowledge-intensive industry. What's more, the cost of recruitment
and training was a huge expense for most IT firms.
Handling the menace of attrition was therefore very important to IT companies. Attrition
affected the quality of service and also led to higher Training & Development expenditure,
affecting the overall performance of the organization. IT companies in India were taking
steps to counter the rising levels of attrition.
Companies were beginning to realize the importance of factors other than salary with which
to motivate their employees to stay. A healthy work environment, continuous employee
learning, work-life balance, recognition and corporate brand building were some of the key
initiatives taken up by IT companies in recent years to manage attrition. In 2004, Infosys
Technologies Limited (Infosys)2devised a policy of taking security deposits from fresh
graduates who joined the company at the entry level to discourage them from leaving the
company during the training period whereas Wipro Technologies Ltd3 (Wipro) started a
matchmaking service for its employees.
The purpose of this service was to help employees chose their life partners within Wipro in
the hope that if employees picked spouses from the same company, they could spend more
time together, say while traveling/dining etc. thereby improving the work-life balance.


Trends in Attrition
Liberalization of the Indian economy in 1991 paved the way for the growth of the IT
industry. The most prominent players in the Indian IT industry by the mid-1990s were Tata
Consultancy Services4(TCS), Infosys, Wipro, Satyam Computer Services Limited5 (Satyam),
Polaris Software Labs6(Polaris), and Patni Computer Systems Limited7 (Patni) (Refer
Exhibit II).By 1995 there was a new trend of „poaching' of employees by rival IT firms.
Poaching necessarily meant luring skilled employees of a rival company by offering better
pay and fringe benefits.
Over the years, more and more software professionals were also emigrating to foreign
countries, particularly to the US.
By late 1998, the Y2K8 problem was hanging over companies across the globe and software
services from Indian IT service companies were increasingly in demand. In 1999, of the total
number of H1-B visas given to foreign workers by the US, half were to Indian IT
professionals. The average starting yearly salary in computer software jobs, in that year was $
60,000 - nearly 10 times the average salary for a computer professional in a comparable job
in India. The employee turnover in 1999-2000 in Indian IT companies was around 15-20%
with the cost of replacing an employee running at over 120% of the salary per employee.
Combating Attrition
Experts are of the view that since the IT industry thrives on individuals with a vital
knowledge base, the industry should help employees develop their knowledge base further in
addition to giving them appropriate monetary and other compensation in order to retain
talent. Combating attrition involves management of people and a thorough understanding of
the human psyche. High levels of employee turnover occur due to a combination of various
workplace environment influences and personal choices made by the employees. In 2003, a
National Association of Software and Service Companies (NASSCOM) survey identified
some of the major drivers of attrition (Refer Table I)...
RecruitmentEffective recruitment strategies can help organizations in employee retention.
Companies following the traditional methods of recruitment observed that a major drawback
of the traditional selection processes was either a poor response or a mismatch between
company goals and individuals' expectations...Compensation and RewardsIncentives to
employees play a vital role in motivating and retaining them in the organization.
Compensation and rewards in the IT industry have long included a basic pay component
along with a bonus pay when the company made higher profits. Later firms initiated
performance based pay that rewarded the employee based on his contribution to the overall
company profits...
Organization Culture Studies and surveys analyzing the psyche of the employee have found
that the work environment has a major impact on the behavior of an employee. An effective
retention strategy would involve acknowledging the employee as the internal customer and
aligning the organizational strategies with employee needs and wants...Work-Life
BalanceEmployees differentiate a good employer from any other employer through the
feeling of „wellbeing' that is generated at the workplace. A balance between work and the
personal goals and wants of an employee contributes positively to the retention of
employees...
Learning & GrowthThe dynamic nature of technology requires the IT industry to upgrade its
operations frequently. So, another way to retain employees is to help them update their
knowledge from time to time through training programs...LeadershipSurveys also identified
poor leadership as one of the reasons for employee attrition. It was observed that leaders
incapable of motivating and guiding employees pushed employees to change jobs frequently.
Wipro initiated the „Wipro Leaders' Qualities Survey' in 1992...
Emerging Challenges
By 2004, most Indian IT companies started positioning themselves as global firms. Many
companies already had offices in foreign countries. For instance, Infosys had development
centers in Canada, China and the Czech Republic...
Excerpts >>
4] Tata Consultancy Services is an Information Technology consulting services and business
process outsourcing organization. It was established in 1968. The company posted revenues
of Rs. 97.27 billion and a net profit of Rs.22.56 billion for the financial year 2004 -
2005.5] Satyam Computer Services Limited, established in 1987 is a leading global
consulting and IT services company. For the financial year 2004-2005, Satyam reported
revenues of Rs. 71.164 billion and a net profit of Rs.34.64 billion.6] Polaris Software Lab
limited, incorporated in 1993, is a technology solutions provider in the Banking and Financial
Services sector. Around 58 per cent of the company's revenues come from the financial
sector. The company reported revenues of Rs.7.87 billion and a net profit of Rs. 0.74 billion
for the financial year 2004-2005.7] Patni Computer Systems limited, established in 1978, is a
global IT Services provider. Patni posted revenues of Rs. 14.13 billion and a net profit of Rs
2.51 billion for the financial year 2004.8] The Y2K problem refers to a software error due to
the small memory space of the first generation computers. To save on space on the first
generation computers' memory, the four-digit Gregorian year was abbreviated to the last two
digits. This was all right in the twentieth century. With the advent of year 2000,
representation of the year in two digits would have caused failures in arithmetic, incorrect
software would have assumed that the maximum value of a year field was "99" and would
roll systems over to "00" which could be mistakenly interpreted as 1900 rather than 2000,
resulting in negative date calculations and thereby causing worldwide information collapse.
Managing Attrition in the Indian Information Technology Industry - Next Page>>
1] R. Subramanium, "Infy stresses more on human assets", www.economictimes.com, May
22, 2005.2] Infosys Technologies Ltd, established in 1981, provides consulting and IT
services to clients globally. The company for the financial year 2004-2005 recorded revenues
of Rs.71.296 billion and a net profit of Rs.18.917 billion.3] Wipro Technologies Ltd., was
established in 1980 and provides IT Services, Solutions & Products. The company recorded
revenues of Rs. 81.70 billion and a net profit of Rs. 16.21 billion for the financial year 2004-
2005.


Starbucks' Human Resource Management Policies and the Growth Challenge
The relationship we have with our people and the culture of our company is our most
sustainable competitive advantage."
-Howard Schultz, chairman and chief global strategist of Starbucks, in 2002.1
"My biggest fear isn't the competition, although I respect it. It's having a robust pipeline of
people to open and manage the stores who will also be able to take their next steps with the
company."
-Jim Donald, president, Starbucks North America in 2005.2
Introduction
In January 2005, when Starbucks Coffee Company (Starbucks) was placed second among
large companies in the Fortune "Best Companies to Work For" survey, it was no surprise to
those familiar with the company's human resources management policies and work culture. In
general, the retail industry is notorious for its indifferent attitude towards employees. Despite
the fact that employees, especially those on the frontline, are critical to the success of retail
businesses, most companies do not have a strong relationship with their employees, and
consequently suffer from a high rate of employee turnover (In the early 2000s, employee
turnover in the retail industry was around 200 percent).
In this scenario, Starbucks stood out for its employee-friendly policies and supportive work
culture. The company was especially noted for the extension of its benefits program to part-
time workers - something that not many other companies offered. As a result, Starbucks
employees were among the most productive in the industry and the company had a relatively
low employee turnover.
Though it was popular as an employer, Starbucks' main challenge in the early 2000s was
whether it would be able to continue to attract and retain the right kind of employees in the
right numbers, to man its rapid expansion program. Although it experienced slow growth in
the initial years the company expanded rapidly after its Initial Public Offer (IPO) in 1992 and
grew at an average rate of around 20 percent per annum. Analysts said that, in the light of its
ambitious expansion program, Starbucks' generous human resource policies made sound
strategic sense, as they kept the turnover low and provided a ready pool of experienced
employees to support expansion.
However, by the early 2000s, three possible problems had to be considered - would the
company be able to support its staff with the same level of benefits in the future, given the
large increase in the number of employees; would the company be able to retain employees if
it made any move to lower its human resource costs by cutting down on benefits; and would
Starbucks be able to maintain its small company culture, an important element in its past
growth.
Starbucks was founded in 1971, by three coffee lovers, Gordon Bowker (Bowker), Jerry
Baldwin (Baldwin), and Zev Siegl (Siegl). Baldwin and Bowker were fond of Peet's coffee,
which they drank when they were at college in San Francisco. Even after they moved to
Seattle, they continued ordering Peet's coffee by mail.On one such occasion, Bowker got the
idea of opening a coffee shop in Seattle to supply world-class coffee to Seattle residents. He
talked it over with Baldwin and his neighbor Siegl, and together, the trio set up the first
Starbucks store in Seattle. (Starbucks originally sold only whole bean coffee. The coffee bar
concept evolved much later).
Starbucks grew at a slow pace initially and at the end of its first decade (1981), there were
four Starbucks stores. The partners also opened a roasting plant in Seattle. In 1981, Howard
Schultz (Schultz), a housewares company executive from New York, became interested in
Starbucks.He went to Seattle to meet the partners and learn more about the business. What he
saw of Starbucks interested Schultz immensely, and he soon convinced the partners to hire
him in a marketing position at the company.
Schultz saw the potential of serving ready-to-drink coffee by the mug, and suggested
introducing the concept in the US. The partners however, were reluctant to extend their brand
into espresso drinks, and it took Schultz a year to convince them of the potential of the
idea.Eventually, Starbucks started serving espresso coffee in 1985, when it opened its sixth
store in downtown Seattle. The concept was an immense success and within two months, the
store was serving over 800 customers a day (espresso sales were much higher than sales of
the best selling whole bean coffee).
Schultz was keen on extending this concept to the other stores as well, but Baldwin believed
that selling beverages distracted the company from the core business of selling top quality,
whole bean coffee. Eventually, in 1985, Schultz left Starbucks and started his own coffee bar
called Il Giornale. Bowker and Baldwin, along with a few private investors provided
financial backing for this venture, and Starbucks supplied the coffee beans.Schultz had
opened Giornale in partnership with Dave Olsen (Olsen), who was previously the owner of
Café Allegro, a coffee bar. Olsen and Schultz had a strong partnership as Schultz took care of
the external aspects of the business, while Olsen brought his experience to the making and
serving of coffee.In 1987, Baldwin, Bowker and Siegl decided to sell Starbucks, with its six
retail stores, roasting plant, and the corporate name. Schultz, along with a group of local
investors bought Starbucks for $3.7 million. Eventually, he changed Giornale's name to
Starbucks Coffee Company, and merged the two businesses.Starbucks grew rapidly under
Schultz's leadership. During the late 1980s, the company expanded into Chicago, Vancouver
and Portland, and Schultz promised investors that Starbucks would have 125 locations by the
early 1990s...

Human Resources Management at Starbucks
Starbucks realized early on that motivated and committed human resources were the key to
the success of a retail business. Therefore the company took great care in selecting the right
kind of people and made an effort to retain them. Consequently, the company's human
resource policies reflected its commitment to its employees. Starbucks relied on its baristas
and other frontline staff to a great extent in creating the „Starbucks Experience' which
differentiated it from competitors. Therefore the company paid considerable attention to the
kind of people it recruited. Starbucks' recruitment motto was "To have the right people hiring
the right people."
Starbucks hired people for qualities like adaptability, dependability and the ability to work in
a team. The company often stated the qualities that it looked for in employees upfront in its
job postings, which allowed prospective employees to self-select themselves to a certain
extent. Having selected the right kind of people, Starbucks invested in training them in the
skills they would require to perform their jobs efficiently. Starbucks was one of the few retail
companies to invest considerably in employee training and provide comprehensive training to
all classes of employees, including part-timers...
The Human Resources' Challenge
Analysts said that Starbucks biggest challenge in the early 2000s would be to ensure that the
company's image as a positive employer survived its rapid expansion program, and to find the
right kind of people in the right numbers to support these expansion plans. Considering the
rate at which the company was expanding, analysts wondered whether Starbucks would be
able to retain its spirit even when it doubled or tripled its size. By the early 2000s, the
company began to show signs that its generous policies and high human resource costs were
reflecting on its financial strength.
Although the company did not reveal the amount it spent on employees, it said that it spent
more on them than it did on advertising, which stood at $68.3 million in fiscal 2004. That the
company was finding its human resource costs burdensome was reflected in the fact that it
effected an increase of 11 cents on its beverage prices in mid-2004. Analysts wondered
whether the company's cost problems could be met by a price increase, as customers already
paid a premium for Starbucks beverages. On the other hand, it would not be easy for the
company to cut down on benefits, as it could result in a major morale problem within the
company...
Excerpts >>
Starbucks' Human Resource Management Policies and the Growth Challenge - Next Page>>
1] "The Culture Connection," www.apm.com, June 2002.
2] Gretchen Weber, "Preserving the Starbucks' Counter Culture," Workforce Management,
February 2005.
Employee Training and Development at Motorola
"Few companies take their commitment to employability of people more seriously than
Motorola."1
- Sumantra Ghoshal, Christopher a Bartlett & Peter Moran2 in Sloan Management Review.
"Training and a strong learning ethic are embedded parts of Motorola's culture...The
corporation learned some time ago that dollars spent on training programs not only
empowered their employees but provided the necessary skills for the company's marketplace
dominance."3
- James Borton, Columnist, Asia Times.

Top Training Company in the World
For nearly eight decades, the US based Motorola Inc. (Motorola) has been recognized as one
of the best providers of training to its employees in the world. Motorola began training its
employees' right in 1928, the year of its inception, on the factory floor as purely technical
product training.Training, at that time, just meant teaching new recruits how to handle the
manufacturing equipment to perform various predetermined tasks assigned to them. But by
the 1980s, Motorola had emerged as a model organization in the corporate world for
employee education, training and development.
The innovative training programs of Motorola turned training into a continuous learning
process. In the 1980s, the training initiatives of the company culminated in the setting up of
the Motorola Education and Training Center, an exclusive institute to look after the training
and development requirements of Motorola's employees.
The institute was later elevated to the status of a university - Motorola University - in 1989.
These training experiments became such a resounding success that employee productivity
improved year after year and quality-wise Motorola's products became synonymous with
perfection.Leading companies all over the world visited Motorola's headquarters to study the
high-performance work practices of the company. They discovered that Motorola's success
was built on the strong foundations of corporate-wide learning practices and that Motorola
University was the cornerstone of corporate learning.
Top Training Company in the World Contd...
In recognition of its excellent training and development practices, the American Society for
Training and Development (ASTD)4 named Motorola the „Top Training Company' and
conferred on Robert Galvin (Galvin), the former CEO of the company, its „Champion of
Workplace Learning and Performance Award' for the year 1999. Speaking on Motorola's
training initiatives and Galvin's contribution, Tina Sung, President and CEO of ASTD, said,
"Galvin is a true champion of employees being an integral part of the organizational success.
He set the corporate standard for investing in education and has demonstrated that training
and development pay off in productivity, performance and quality."5
In recognition of its excellent training and development practices, the American Society for
Training and Development (ASTD)4 named Motorola the „Top Training Company' and
conferred on Robert Galvin (Galvin), the former CEO of the company, its „Champion of
Workplace Learning and Performance Award' for the year 1999. Speaking on Motorola's
training initiatives and Galvin's contribution, Tina Sung, President and CEO of ASTD, said,
"Galvin is a true champion of employees being an integral part of the organizational success.
He set the corporate standard for investing in education and has demonstrated that training
and development pay off in productivity, performance and quality."5
Background Note
Motorola was founded in 1928 when the Galvin brothers, Paul and Joseph, set up the Galvin
Manufacturing Corporation, in Chicago, Illinois, USA. Its first product was a "battery
eliminator," which allowed the consumers to operate radios directly using household current
instead of batteries.
In the 1930s, the company successfully commercialized car radios under the brand name
"Motorola," a word which suggested sound in motion by combining "motor" with
"Victrola6." In 1936, Motorola entered the new field of radio communications with the
product Police Cruiser, an AM automobile radio that was pre-set to a single frequency to
receive police broadcasts. In 1940, Daniel Noble (Noble), a pioneer in FM radio
communications and semiconductor technology, joined Motorola as director of research.
Soon, the company established a communication division followed by a subsidiary sales
corporation, Motorola Communications and Electronics in 1941.
The Motorola trademark was so widely recognized that the company's name was changed
from Galvin Manufacturing Corporation to Motorola Inc. in 1947. Motorola entered the
television market in 1947. In 1949, Noble launched a research & development facility in
Arizona to explore the potential of the newly invented transistor. In 1956, Motorola became a
commercial producer and supplier of semiconductors for sale to other manufacturers.The
company began manufacturing integrated circuits and microprocessors in a bid to find
customers outside the auto industry. In 1958, Motorola opened an office in Tokyo, to
Training and Development Initiatives
The Initial Efforts
Motorola had started training its employees' way back in the 1920s, and the importance of
training continued to grow. Till the early 1980s, Motorola had its own standard employee
development activities in which training was the key element.During those days, when people
were recruited for manufacturing, the company looked for three essential qualities in the
employees - the communication and computational skills of a seventh grader; basic problem
solving abilities both in an individual capacity and as a team player; and willingness to accept
work hours as the time it took to achieve quality output rather than regular clock hours.
The quality of the output was the primary consideration for Motorola, and employees were
expected to make full efforts to achieve quality. Most of the employees learned their job
through observing the seniors at work and learning through the trial and error method. The
training lessons imparted to them involved techniques to improve their communication skills
and sharpen their calculation skills...

The Motorola University
After conducting various training experiments that spanned a few decades, Motorola came to
understand that training involved more than designing and implementing one particular
program for a set of employees. To keep improving performance, training should be a
continuous learning process involving each and every person in the organization. Normally,
training was an ad hoc measure, whereas education gave the recipient a vision. Education was
viewed as an investment rather than a cost. Therefore, Motorola decide to elevate MTEC to
the status of a university in 1989...
Focus on e-Learning
Motorola University created a new internal institute named College of Learning Technologies
(CLT) to develop educational delivery systems through satellite, Internet and virtual
classrooms.This department was responsible for providing innovative learning via virtual
classrooms, online experiences, use of CD-ROMS and through multimedia such as video and
satellite conferences. The university placed a large selection of courses and training materials
on its intranet , available around the world at any time to its employees...
Excerpts >>
4] Founded in 1944, ASTD is the world's largest association dedicated to workplace learning
and performance professionals.5] "ASTD recognizes Robert Galvin,"
www.qualitydigest.com, November 2000.6] Victrola is a brand of gramophones made by the
Victor Talking Machine Company.
mote customer and supplier relations with Japanese companies...
1] Sumantra Ghoshal, Christopher A Bartlett & Peter Moran, "A New Manifesto for
Management," Sloan Management Review, Spring 1999.2] At the time of writing the above
mentioned article (1999), Sumantra Ghoshal was a strategic leadership professor at the
London Business School; Christopher A. Bartlett was a professor of business administration
at the Harvard Business School; and Peter Moran was an assistant professor of strategic and
international management at the London Business School.3] James Borton, "Motorola
University scores high grades in China," www.news.cens.com, July 04, 2002.

Human Resource Management - Best Practices at Marriott International
"That guest's room may be our product, but our associate's caring attitude is our value. We
can't measure it with statistics, and we can't manufacture it. We can deliver that value only if
we can attract, retain and inspire the best people - with what we call 'The Spirit to Serve.'''1
- JW Marriott Jr., CEO, Marriott International.
"The comments from our customers is not about how nice the building is but about how nice
the people are, how good the service is, how hospitable the employees are. That is what
makes the difference, because people from the top all the way down to the organization really
care."2
- JW Marriott Jr., CEO, Marriott International.
The Spirit to Serve
Once, when a customer checked in at an Anaheim Marriott hotel, she was in a very disturbed
state of mind. It was on her way to the hotel that she learnt of her sister's death. The worst
part was that she had to wait the whole night at the hotel to board a flight the next
morning.As she checked into the hotel, Charles, who was looking after room service, asked
her why she was upset. On hearing her reply, he assured her of any help she might need
through the night. Soon after, Charles returned with a pot of coffee and a piece of apple pie,
at his own expense. He also handed her a sympathy card, signed by seven of his colleagues.
By pooling some money contributed by his colleagues, he brought some flowers and gave
them to her, saying, "We just wanted you to know you're not among strangers here."3
Narrating this incident to JW Marriott Jr., the CEO of Marriott International Inc4 (Bill
Marriott), the customer wrote, "Mr. Marriott, I'll never meet you. And I don't need to meet
you because I met Charles. I know what you stand for.I know what your values are. I want to
assure you that as long as I live; I will stay at your hotels and tell my friends to stay at your
hotels. That night I realized that you care more about me as a person than you do about the
few dollars I spent at your hotel."5
The Spirit to Serve Contd...
The warm and considerate attitude of employees like Charles is, perhaps, the major reason
why customers across the world remain loyal to one name in the hospitality industry -
Marriott. Charles, through his conduct, reflected the attitude of the 128,000 Marriott
employees who strive to work with the 'spirit to serve.'Commenting on how Marriott creates
loyal customers, JW Marriott said, "Our people care a lot about the guests and we work very
hard to encourage our people to do so. We have reward programmes, employee celebrations
and a lot of stroking of our people to make sure they recognize the value of the guest."6
Background Note
In 1927, J. William Marriott (JW Marriott) set-up a nine-seat root beer7 shop in Washington.
After some time, William started serving hot food along with the root beer and named the
shop as 'The Hot Shoppe.' In 1929, Hot Shoppe was officially incorporated as Hot Shoppes
Inc and in 1937, Hot Shoppe, ventured into airline catering at Washington airport, serving the
Eastern, American and Capital airlines.Over the next three decades, Hot Shoppes diversified
into other businesses including food services management8 by starting a cafeteria at the US
Treasury Building in Washington DC and the Highway Division. In 1966, the company
ventured overseas, acquiring an airline catering kitchen in Caracas, Venezuela. In November
1967, its name was changed to the Marriott Corporation (Marriott).
In 1982, Marriott acquired Host International, a leading hospitality services provider in the
US, becoming the largest operator of airport terminal food, beverage and merchandise
facilities in the US. In the 1980s, Marriott acquired several companies including the
American Resorts Corporation (vacation business, 1984), Gladieux Corporation (food service
company, 1985), Service Systems (contact food service company, 1985), Howard Johnson
Company (hotels & inns, 1985) and Residency Inn Company9 (1987). With the acquisition of
the Saga Corporation, a diversified food service management company in 1986, Marriott
became the largest food service management company in the US.
Marriott also diversified into the moderate price segment of hotels under the brand name
'Courtyard' (1983). In 1987, Marriott entered the field of economy lodging by launching the
first Fairfield Inn in Atlanta, Georgia. That year, Marriott also launched its worldwide
reservation centre (WRC)10 at Omaha, Nebraska. This centre became the largest one-point
reservation operation in the US hotel industry...

The Marriott Way
Marriott's history of taking care of its employees dated back to its early days, when its
founder, JW Marriott, counselled the company's employees individually on their personal
problems at his first hotel. He valued their presence, kept them posted about the latest
happenings in Marriott and gave them excellent training. JW Marriott always ensured that
employees who joined the company felt themselves a part of the Marriott family. He made
managers responsible for the satisfaction of their subordinates. JW Marriott was always
conscious of the fact that in the hospitality industry, providing the best service to customers
was paramount...

The HR Practices
Apart from providing a competitive pay package, Marriott strived to give its employees a
good work life. The company gave equal importance to non-monetary factors such as work-
life balance, good leadership, better growth opportunities, a friendly work environment and
training.Employees stayed longer with Marriott as they were happy with these non-monetary
factors and thought them more important.Marriott's culture and guiding principles had a
significant influence on the company's HR practices including manpower planning,
recruitment and selection; training and development, employee retention and welfare
initiatives and grievance redress.Manpower Planning, Recruitment and SelectionMarriott
attached a lot of importance to manpower planning. It started right from entry level and went
through to higher positions. Every unit of Marriott (division or department) prepared its
expansion plans over the next couple of years, and, in the process, decided on the number of
entry level and managerial employees required for the expansion.Details on the number of
new units planned in the given time frame (two to five years), a rough picture of the likely
organization structure, the time required to develop employees who could take managerial
positions, current availability of employees within Marriott and the necessity to recruit
externally - all these were determined during the planning process...
Training and Development
Once the right candidates were recruited, it was important to get them accustomed to the
company's unique work environment. Training and development played a key role here.
These programs varied between frontline employees and managerial personnel. Over time,
training programs evolved from classroom- based teaching to interactive multimedia training.
Fresh recruits went through an eight-hour initial training session, during which they were
given an overview of Marriott and their individual roles.
A unique feature was that senior hotel employees served lunch at the first session. During the
three- month training period which followed, a mentor, addressed as 'buddy' was allotted to
each recruit. The mentor guided the trainee. All trainees attended refresher sessions after the
first and second months. On the final day of training, recruits enjoyed a sumptuous feast at a
Marriott hotel...
Employee Retention and Welfare Initiatives
Retaining employees in the hospitality industry was vital as the cost of recruiting and training
new employees was very high. Marriott operated in an industry where every day counted and
weekends and holidays generated more business than weekdays.Customer service had to be
provided on a 24/7/365 basis. The implication was that employees had to go through a hectic
work schedule; an average work week lasted more than 50 hours. With the increasing work
load due to rising customers in the late-1990s, several key managers at Marriott left.
They wanted to devote more time to their personal lives and their jobs at Marriott were not
helping the cause.Facing this challenge, Marriott launched a new program called
Management Flexibility in February 2000 on a pilot basis at three of its hotels.The aim was to
assist Marriott's managers in balancing their professional and personal lives, without
negatively affecting customer service or the company's financials...
Grievance Redressal System
By the mid-1990s, Marriott had a comprehensive complaint resolution system in place,
known as the Guarantee of Fair Treatment (GFT), to ensure that employee grievances were
addressed.Under GFT, complaints passed through successive stages in Marriott's hierarchy,
starting with the immediate superior, depending on whether or not the said employee was
happy with the redress response given at each stage.However, given the decentralized nature
of Marriott's operations, and with managers handling several tasks, resolution of complaints
through GFT did not quite produce the desired results.It, therefore, decided to try new
methods of complaint resolution while continuing with GFT. These methods included
mediation, a toll-free hotline and peer-review...
The Benefits Reaped
Marriott's efforts over the decades to develop an employee-friendly work place earned it
widespread recognition in the hospitality industry. The awards it received for 'the best place
to work' were testimony. (Refer Exhibit IV for awards received by Marriott). The company
reaped benefits like higher employee satisfaction and less turnover. Employee satisfaction
could be gauged from the 2003 Associate Opinion Survey, in which 90% of employees
surveyed expressed great pride in working for Marriott...
Excerpts >>
6] Watkins, Edward, Bill Marriott speaks, Lodging Hospitality, September 1997.
7] A carbonated soft drink made from extracts of certain plant roots and herbs.
8] Serving of food items at office buildings and large complexes through cafeterias.
Normally, these cafeterias are fully dedicated to the particular office building in which they
operate.
9] An all-suite hotel chain targeted at extended stay travellers.
10] WRCs are physical set-ups (like centralized train reservation centres) connected through
computer networks.
Human Resource Management - Best Practices at Marriott International - Next Page>>
1] Marriott, Jr., J.W, Our Competitive Strength, Vital Speeches of the Day, January 1,
2001.2] Mary Zachariah, Employees cornerstone of Marriott culture, Business Times
(Malaysia), September 08, 2000.3] Marriott, Jr., J.W, Our Competitive Strength, Vital
Speeches of the Day, January 1, 2001.4]Marriott International is a leading lodging company
with more than 2,800 lodging properties in the US and 69 other countries in the world.
Marriott operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton,
Renaissance, Residence Inn, Courtyard, Towneplace Suites, Fairfield Inn, Springhill Suites,
Ramada International and Bulgari brand names. It develops and operates vacation ownership
resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and
Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides
furnished corporate housing through its Marriott ExecuStay division; and operates conference
centres. The company is headquartered in Washington DC, and has approximately 128,000
employees. In the fiscal year 2003, Marriott International reported sales from continuing
operations of $9 bn.5] Terry McKenna, "Customer: service or care?" National Petroleum
News, June 2002.


Volvo's HR Practices - Focus on Job Enrichment
To create an environment that will give satisfaction to the employees in their daily tasks is a
matter for society as a whole. Due to the advanced economic and social structure of Swedish
society, we have encountered earlier than more countries new problems in the organization of
jobs and the working environment. We do not look upon these problems as a threat. Our
familiarity with this type of question could well lead to an improvement in competitive
ability."1
- Pehr G Gyllenhammar, Former President, Volvo Group in 1973.
"By creating value for our customers, we create value for our shareholders. We use our
expertise to create transport-related products and services of superior quality, safety and
environmental care for demanding customers in selected segments. We work with energy,
passion and respect for the individual."
- Volvo's Mission Statement, www.volvo.com.

Introduction
In May 1993, the Swedish automobile major, Volvo AB (Volvo) announced the closure of its
car manufacturing facility at Uddevalla, Sweden, barely five years since its launch in 1989. A
year later, the company had to shutdown yet another world famous facility, the car assembly
plant at Kalmar, also in Sweden. Reacting to the two closures within a year's gap, analysts
said Volvo's human centric approach towards automobile manufacturing was no longer
feasible in the fiercely competitive scenario of the 1990s, with most companies striving hard
to improve production efficiency. Volvo was well recognized in the industry for its
employee-friendly policies ever since its inception.
Guided by the 'Volvo Way,' the company had made conscious efforts to implement job
enrichment concepts such as job rotation, job enlargement and employee work groups in its
manufacturing facilities (Refer Exhibit I for the Volvo Way). In the late 1960s and early
1970s, when the company faced the problem of increasing employee turnover and
absenteeism, it introduced these concepts and obtained positive results.
Volvo was inspired to build a new facility keeping this work design as a basis. This reiterated
the company's belief that industry needed to adapt itself to the people's requirements and not
vice-versa. This concept was implemented successfully in other plants of the company too in
the 1970s. The best practices in Human Relations (HR) tried and tested in these plants were
passed on to new plants established in the 1980s. While investing heavily in developing new
plants like Kalmar and Uddevalla, where new work design concepts were implemented,
Volvo was conscious of the risks involved and the possible effect on the company's financial
performance if the experiments failed.
Acknowledging this, Gyllenhammar, in Harvard Business Review wrote, "Volvo's Kalmar
plant, for example, is designed for a specific purpose: car assembly in working groups of
about 20 people. If it didn't work, it would be a costly and visible failure, in both financial
and social terms. We would lose credibility with our people and those who are watching from
outside."2
Gyllenhammar's apprehensions proved correct when Volvo closed down Kalmar plant in
1994. However, Volvo's efforts in bringing changes in work design offered valuable lessons
to both the academic and corporate community.Analysts appreciated Volvo for its constant
emphasis on learning from experiences and implementing the lessons so learnt in its new
initiatives. This contributed significantly to the development of human-centric production
systems. These systems brought to life several theories and concepts, which had earlier only
been enunciated in textbooks but rarely practised with the kind of seriousness with which
Volvo did.
Background Note
Volvo was founded on July 25, 1924, when Gaustaf Larson (Larson), an engineer and Assar
Gabrielsson (Gabrielsson), an economist, met over a meal and agreed to build a car suited for
Sweden's roads and climatic conditions.The two founders had worked earlier for SKF, a
famous Swedish bearings manufacturer, where they nurtured the dream of building a car. In
1926, the duo prepared 10 prototypes of the car to convince SKF into investing in their
company.
SKF not only agreed to invest SEK 200,000 kroner, but also lent its patented name, AB
Volvo. On April 14, 1927, the new company rolled out its first car, the OU4, from a factory
near Goteberg, Sweden. The day marked the official date of inception of AB Volvo (Volvo)3.
In September 1929, Volvo reported its first ever profits. In 1934, Volvo launched its first bus,
the B-1. The product rapidly gained acceptance as a vehicle fit for rural areas. By the time
World War II broke out in 1939, Volvo had established itself as a profitable automobile
manufacturer with a broad product range.
The company's automobile engines were known for their reliability and were used in cars,
buses, boats, fire tenders and military tanks. Volvo began exporting vehicles on a major scale
to Latin America, Japan, China, Israel, Ireland, Holland and Belgium. Volvo's financials were
boosted during the war period (1939-1945), when it supplied a large number of vehicles to
the military.In 1946, Volvo introduced its first diesel bus, the B-56, which became
immensely popular as a city bus as well as a tourist coach. By 1948, Volvo emerged as a
major tractor manufacturer. In 1949, Volvo rolled out its 100,000th vehicle from its assembly
lines. In 1955, the company began exporting to the US. In 1963, Volvo commenced car
production in Canada, becoming the first European automobile manufacturer to set up such
facilities in North America. Its manufacturing facility in Belgium became operational in
1965. Volvo created a separate truck division in 1968.The 1970s witnessed a significant
change in Volvo's operations, under the leadership of Gyllenhammar. In 1972, the Volvo
Technical Centre (VTC) was established, which had The HR Problem
Volvo was among Sweden's leading employers with employees numbering 41,000 in
company-owned plants. Its dealer network provided employment to an additional 10,000
people as of 1973. An additional 15,000 people were employed through Volvo's sub-
contractors. Volvo's products were marketed in 120 countries with 75% of its total production
exported mainly to other European countries and the US...
The Job Enrichment Experiments
The changes in the organization structure facilitated easier implementation of job enrichment
concepts. Volvo's efforts involved both employees and the management. The management
decided to experiment with five job enrichment measures - job rotation, management-
employee councils, small work groups, change implementation and employee-oriented
facilities - at its manufacturing facilities. Job RotationJob rotation involved shifting around of
jobs among workers according to a pre-determined plan. Each employee within a group was
offered a job, which was different both physically and psychologically from his/her previous
job...
The New HR Initiatives
Volvo introduced three new HR programs in the late 1970s and early 1980s. These were
Match Project, Full Rulle (Full Speed Ahead) and Dialog. The first was introduced in 1983. It
aimed at achieving five HR objectives, which were: • Training new recruits intensively. •
Disseminating organizational objectives to all employees in the company.• Framing rules and
regulations for employees to establish discipline...
The Uddevalla Plant
Uddevalla offered the best work environment for employees. Developing staff competence
was deemed vital by Volvo to build quality cars as well as to achieve the organizational
objectives of improving productivity, flexibility and efficiency. Also, operations had to be
scaled up as Kalmar could accommodate only 600 employees, which was not sufficient.
Employee representatives were involved in the plant's planning group, which had a team of
researchers with diverse backgrounds ranging from engineering to psychology...

End of the Socio-Technical Approach?
While Volvo was going ahead with its human-centric approach, the external market forces in
the automotive industry were changing. This forced the company to take serious measures,
which stopped the progress of its job enrichment initiatives. In the early 1990s, with the
declining demand for cars in the global market, it was no longer feasible for Volvo to
continue operating in relatively smaller facilities like Kalmar and Uddevalla...
R&D facilities, including a safety centre and an Emission Laboratory...
Volvo's HR Practices - Focus on Job Enrichment - Next Page>>
1] Taylor, Lynda King, Worker participation in Sweden, Industrial & Commercial Training,
January 1973.2] Gyllenhammar, Pehr G, How Volvo adapts work to people? Harvard
Business Review, July/August 1977
Training Employees of IBM Through e-Learning
E-learning is a technology area that often has both first-tier benefits, such as reduced travel
costs, and second-tier benefits, such as increased employee performance that directly impacts
profitability."
- Rebecca Wettemann, research director for Nucleus Research.1


Introduction IBM
In 2002, the International Business Machines Corporation (IBM)2 was ranked fourth by the
Training3magazine on its 'The 2002 Training Top 100' list (Refer Exhibit I). The magazine
ranked companies based on their commitment4 towards workforce development and training
imparted to employees even during periods of financial uncertainty. Since its inception, IBM
had been focusing on human resources development. The company concentrated on the
education and training of its employees as an integral part of their development. During the
mid 1990s, IBM reportedly spent about $1 billion for training its employees.
However, in the late 1990s, IBM undertook a cost cutting drive, and started looking for ways
to train its employees effectively at lower costs.
After considerable research, in 1999, IBM decided to use e-learning (Refer Exhibit II) to train
its employees. Initially, e-learning was used to train IBM's newly recruited managers.IBM
saved millions of dollars by training employees through e-learning. E-learning also created a
better learning environment for the company's employees, compared to the traditional
training methods. The company reportedly saved about $166 million within one year of
implementing the e-learning program for training its employees all over the world. The figure
rose to $350 million in 2001.
During this year, IBM reported a return on investment (ROI)5 of 2284 percent (Refer Exhibit
III) from its Basic Blue e-learning program. This was mainly due to the significant reduction
in the company's training costs and positive results reaped from e-learning.Andrew Sadler,
director of IBM Mindspan Solutions6, explained the benefits of e-learning to IBM, "All
measures of effectiveness went up. It's saving money and delivering more effective training,
while at the same time providing five times more content than before." By 2002, IBM had
emerged as the company with the largest number of employees who have enrolled into e-
learning courses.
However, a section of analysts and some managers at IBM felt that e-learning would never be
able to replace the traditional modes of training (Refer Exhibit IV) completely.
Rick Horton, general manager of learning services at IBM, said, "The classroom is still the
best in a high-technology environment, which requires hands-on laboratories and teaming, or
a situation where it is important for the group to be together to take advantage of the
equipment."Though there were varied opinions about the effectiveness of e-learning as a
training tool for employees, IBM saw it as a major business opportunity and started offering
e-learning products to other organizations as well. Analysts estimated that the market for e-
learning programs would grow from $2.1 billion in 2001 to $33.6 billion in 2005 representing
a 100 percent compounded annual growth rate (CAGR).


Background Note
Since the inception of IBM, its top management laid great emphasis on respecting every
employee. It felt that every employee's contribution was important for the organization.
Thomas J. Watson Sr. (Watson Sr.)7, the father of modern IBM had once said, "By the
simple belief that if we respected our people and helped them respect themselves, the
company would certainly profit." The HR policies at IBM were employee-friendly...
Online Training at IBM
In 1999, IBM launched the pilot Basic Blue management training program, which was fully
deployed in 2000. Basic Blue was an in-house management training program for new
managers. It imparted 75 percent of the training online and the remaining 25 percent through
the traditional classroom mode.The e-learning part included articles, simulations, job aids and
short courses. The founding principle of Basic Blue was that 'learning is an extended process,
not a one-time event.' Basic Blue was based on a '4-Tier blended learning model' (Refer
Table I). The first three tiers were delivered online and the fourth tier included one-week long
traditional classroom training.
The program offered basic skills and knowledge to managers so that they can become
effective leaders and people-oriented managers. The managers were divided into groups of 24
members each.
Each group then entered the first tier of the Basic Blue program (without interaction with the
other members of the group - learning from information)...
e-Learning at IBM - Future Plans
The e-learning projects of IBM had been successful right from the initial stages of their
implementation. These programs were appreciated by HR experts of IBM, and other
companies. The Basic Blue program bagged three awards of 'Excellence in Practice' from the
American Society for Training & Development (ASTD) in March 2000. It was also included
among the ten best 'world-class implementations of corporate learning' initiatives by the "e-
Learning across the Enterprise: The Benchmarking Study of Best Practices" (Brandon Hall)
in September 2000...
Excerpts >>
5] A measure of a corporation's profitability calculated by dividing the fiscal year's income
with common stock and preferred stock equity plus long-term debt. In general, ROI can be
considered the income which an investment returns in a year.6] IBM's e-learning division. It
offered e-learning consulting, content development and solutions installations to large
corporations worldwide.7] Watson Sr. joined IBM in 1914 as the managing director and later
on, took control of the company after the death of the chairman, George W Fairchild, in 1924.
Training Employees of IBM Through e-Learning - Next Page>>
1] As quoted in 'E-Learning delivers a 2284% ROI for IBM,' www.elearningmag.com,
October 2001. Headquartered in Wellesley, Massachusetts, Nucleus Research is a company
involved in ROI research. It also offers expert advice, analyses, and financial modeling tools
to help companies calculate the actual return that technology brings to the corporate bottom
line.2] IBM is the world's leading manufacturer of computer hardware. Some of its products
include desktop and notebook PCs, mainframe and servers, storage systems, and peripherals.
IBM is also the second largest software provider (the first one is Microsoft) and one of the
leading manufacturers of semiconductors.3] Training magazine is a professional development
magazine that promotes training and workforce development as a business tool. The
magazine covers management issues like leadership and succession planning, HR issues like
recruitment and retention, and training issues like learning theory, on-the-job skills
assessments, and aligning core workforce competencies to enhance the impact of training and
development programs on the company's bottom line.4] Apart from the pay and other
incentives, these companies concentrated on building a corporate culture that encouraged
creation and application of knowledge, not only for the betterment of the company, but also
for the betterment of individual employees.


Pink Slip Parties - A New Human Resource Buzzword
When you come to an event like this, you realize you are not alone, and that helps."
- An Enthusiastic Attendee of Pink Slip Parties, in March 2000.
A Party with a Difference
It was a late Wednesday evening in April, 2002. Hundreds of people crowded before the
'Hush' restaurant in New York. Their cars jammed the entire street and spilled over onto the
adjacent lanes as well. These people had gathered for a party that was scheduled to begin at
7.00 pm. At seven sharp, the people were allowed into the restaurant and the party began.
Like all other parties, this one had food, music and drinks. However, there was something
unusual about this party. All the attendees wore glow-in-the-dark bands on their wrists in red,
green and yellow colors. And despite the fact that many people seemed to be relaxing,
tapping their feet to the music (and a few dancing), there was a strong undercurrent of gloom.
Though there were many who were making new acquaintances and forming new friendships,
many others were found sitting in the hall's dark corners looking gloomy and sipping drinks.
After around only two hours, the party came to an end.
For the uninitiated, a party that wound up so early, and at which no particular announcements
were made, would perhaps seem rather strange. However, for many people (especially those
in the information technology sector) who had lost their jobs in the wake of the slowdown in
global economy, such parties were a blessing in disguise. Popularly known as 'pink slip
parties,' these parties were becoming popular in many parts of the world during the 21st
century. Personnel from the human resources (HR) departments of many companies,
especially those in the information technology (IT) sector, were amongst the most frequent
visitors to such parties.
By late-2002, the concept of pink slip parties had become an integral part of HR. It was
increasingly being seen as a 'new age' recruitment avenue that not only helped companies get
qualified employees easily, but also helped thousands of laidoff employees revive their
careers and lives...
About Pink Slips Parties
Pink slip parties derive their name from the 'pink slip' - a piece of paper given to employees,
informing them that they have been permanently discharged from their jobs, and asking them
to seek employment elsewhere. The use of pinkslips started in the US in 1915. As these
discharge slips were written on pink colored paper, they came to be known as pink slips, and
the name stuck. A 'Pink Slip Party' is essentially a party for bringing together
discharged/laidoff employees and prospective employers. Pink slip parties are thus like
networking events/career fairs. They act as forums that help in the quick establishment of
new relationships between employees and employers, and help people find a new job or a
new employee (as the case may be)...

Attending the Party
Pink slip parties were usually held once every month on a specified day (such as the first
Wednesday of the month, the last Friday of the month, second Monday of the month etc). In
some cases, these parties were held on a weekly basis. The ideal candidates for pink slip
parties were skilled professionals in need of a job, employers, professional recruiters
(consultancy firms), human resource directors and support service providers (for laidoff
employees). Many job seekers, though not confident of securing a job immediately at the
party, just attended the party in order to network with recruiters and people from various
business backgrounds and to enjoy the free food and drinks...
After the Party
While there were many supporters of pink slip parties, the concept also attracted a lot of
criticism by late-2002. According to some attendees who failed to secure a job immediately,
these parties were of no help. Analysts said that before the IT sector downturn, IT
professionals were able to secure a new job in just two to six weeks, while after the
downturn; the time had increased to three to four months. Hence it was not appropriate to say
that pink slip parties did not work if they did not yield immediate employment
opportunities...

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close