Today’s indian business scene

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Today’s indian business scene

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Today’s indian business scene

  1. 1. Today’s Indian Business Scene
  2. 2. What we will discuss1. Overview of the Business Climate and context past and present2. Changes in the World of Work & Impact on Indian Organizations3. India’s problems in achieving Global Standards4. Changing IR Scene in India6. A Case Study7. Areas to be considered as you consider business in India8. Q and A (but please ask any time!
  3. 3. Business Climate
  4. 4. Indias place in the Global Economy • India is – a country of potential. – Cocked slingshot – Target within range of Indian Capability • India has – Stable economy – Continued economic growth – Governmental regulations changes – FDI enhancements – NRI outreach – Reversal/slowing down of brain drain and welcome home to many – Leveraged IT/ITES Industry strength around the world
  5. 5. India in the Global Market• In general India public and/or private sectors have: – Started work on infrastructure – Leveraged their IT capability to take the lead in the global market in this industry – Expanded the reach of their already global Indian companies – Built presence in Pharmaceutical, Medical, Bio Chemical, Cement, Financial, Rubber, Retail, Cosmetic, Design, Entertainment, Garment and food industries as well as IT.
  6. 6. India in the Global Market• India’s Strengths: – Population – Ability to adapt and move beyond obstacles and barriers with seemingly graceful and instinctive responses – Rising from the inside out on the shoulders and in the minds of the Indian people • pushing the limits of individual contributions and quietly but methodically leveraging physical and financial global presence• India’s Goal – secure the future that has been thousands of years in the making.
  7. 7. College Graduates andEntrepreneurs• Graduates still emerging in significant numbers – not all graduate with the perquisite skills to fill projected career and job opportunities• The education system in India is – aggressively reaching out to business for advice and support – business is proactively moving into the realm of education • establishing Academies as part of their corporate structure • by giving time and energy to nearby Universities and Colleges • building the Vocational Technical Sector of the education system that had not previously been strong.
  8. 8. HOWEVER……• There is still MUCH to do before the future is secure – Accomplished without government intervention or mandate – It is in the hands of the business leaders and progressive academicians – It operates and even thrives around extremes
  9. 9. An Economy in Transition• Predicted to change shape by 2025• From To
  10. 10. Spawned in the development and growth of the IT and ITES Service Industry
  11. 11. Changes in theWorld of Work
  12. 12. What Changed Workplace of 21st Century 1. GLOBALIZATION 2. Information Revolution/Internet 3. New technology 4. HRM Philosophy: Psychological Contract
  13. 13. The Globalization and itsImpact on Business
  14. 14. Today’s Business Realities Assembly A Global Web PartsSales Sales Sales Advertising Parts Parts Design Parts
  15. 15. In India these Developments Impact all sectors including Manufacturing Characteristics of Globalization •Chaotic Competition •Radical change •Opportunities •Strategic alliances •Complexity/Uncertainty •Flexibility •Customer focus •Saliency of People Mgt IssuesCritical issues in shifts from Capital to Knowledge Economy © Debi S. Saini, 2004
  16. 16. “ Hanging on for dear life” : Survival in the face of turbulent change
  17. 17. Indian companies striving to be Global Leaders in this exciting Business Environment The intensity of this will be far greaterin the near term as the velocity of change is increasing
  18. 18. Indian Business is adjusting its sails and setting sites on new horizons
  19. 19. Every journey to corporate transformation requires taking a strategic step in the desired direction A journey of 100 miles begins with a single stepIndian businesses are taking giant steps
  20. 20. The problems IndiaFaces inAchieving GlobalStandards:Challenges for HR
  21. 21. Problems in Achieving Global Standards1. Acceptance of how things are which inhibits growth toward world class/professional/vision2. Hierarchical mindset3. Lack of process sensitivity4. Sense of collective paralysis problems too big and too many5. No frame of reference for creating “customer WOW”
  22. 22. Problems in Achieving Global Standards continued…6. Attitude toward time7. Slow acceptance of change : rigid beliefs and personal values8. Different approach toward safety9. Slow internalization of Work ethic10. Difficulty in differentiating between excellence & mediocrity
  23. 23. Changing IRSceneat Global &National LevelsReflectingNew Thinking &Mindsets
  24. 24. India is governedby a Constitution that foresaw a welfare state and espouses the values of trade unionism and social justice
  25. 25. 1. BUT the role is Changing• Welfare state: inefficient• Government as facilitator• Export-oriented production (SEZs)• Changed labour policies of states
  26. 26. 2. Global Trends – India Trends1. Multilateral IR: consumer/public/gender issues2. New issues: ––Customer Creation/sustenance ––Protecting environment ––Gender issues ––Safety promotion ––Child labour abolition3. Media’s role in new issues
  27. 27. Building Cooperation with UnionsSource: The Conference Board of Canada. Figure 16.6
  28. 28. 3. Emphasis on Performance-related Pay• Flat organization --Flexiblepay• Cost saving: a big concern• Competencies development• Knowledge pay in high-tech. industries
  29. 29. 4. Changed Thinking of State• Changed Govt. thinking--July 1991 Economic Policy--2nd NCL: July 2002• Rationalize Labour Law• Social justice to market & trickle down --Vigorous attack on welfare state ideology
  30. 30. 5. The NEW HRMNew Trends in India: IR practices rooted in HR Strategy• Identify & enforce behavior• Strive for Competitive advantage• Focus on new interventions• HRM & IR merged to produce positive energy• HR strategy is the single most important Consultancy Area
  31. 31. Strategic HRMExpected toDeliverCompetitiveAdvantageAndPerformance
  32. 32. Global BP Influences on HR Practice and ideology in IndiaBrockbank Ulrich Smallwood Lev
  33. 33. Some Soft Strategic HRM Themes•Empowerment/Involvement•Learning organization•QWL, welfare: justice•Employee respect,fairness, pride,camaraderie•Diversity management
  34. 34. Influence of “ Intangibles” on Indian Companies • The most valuable intangible asset for Hindustan Lever Limited are its brands • In large degree, market value of Dr. Reddy’s is a factor of “Quality of their knowledge base --Investment in R&D –Leadership” Dabur has market cap. of nearly 67 times it’s net worth --With same book value Dalmia Cement’s market capitalization is 0.65 times
  35. 35. SomeCompaniesThatPractice“ Soft”HRStrategies
  36. 36. Classic Strips (Mfg.): Come Out of Control Mindset 214 workers including contract workers - Most are blue-collar growth from 4 workers 25 years ago 44 acre campus in Vasai, Mumbai grown from 10x5 ft. space 25 years ago Main motto “ dignity at work.” --Believes in: “ valuing every individual, giving people their due, freedom, respect, opportunity backed by lots of training.” Won Safety & Environment 2003 award (SIGA given to 5 cos. worldwide.) Employee spends 2 ½ hrs every month on training (kaizen) --Co. has a library with trade journals, magazines and books --Most employees are with the Company for the last 15-20 yrs --Women make 1/3rd of the workforce --It includes handicapped people--Proactive diversity policy --The Company shares with employees a %age of its annual profits
  37. 37. Mahindra & Mahindra• Focus on HR – Hired a Yale University-educated president of HR – He was earlier a CEO for 2 Tata Group companies – Heads 150 HR manager• Is partner in building Company Strategy – Responsibilities include CSR• Business Strategy aimed to give competitive advantage: --Talent management --Creating synergy --Creating a culture of integration --Mapping --Succession planning --Developing a global mind-set.” (Grossman, 2006).
  38. 38. Prudential Process Mgt. Services (PPMS)• Company with 1,200 employees--Serves Prudential UK’s President said that if HR fails to live up to expectation, it would be disastrous to their company.• Has reduced attrition to 20 % (Industry 45%)• Strategy comprises: --Competes on its culture and not on compensation -- Family (friends, boyfriends, girlfriends) encouraged to visit workplace --Rapidly enhances their skills --Offers them a conducive environment; makes them stick• Sponsors continuing education --After 18 months, employees are eligible for MBA programs --Specially tailored with top-rated Indian business schools --1/2 tuition fee paid by PPMS
  39. 39. Susken Communication Technologies, Bangalore • Pride --Work culture that exemplifies Co. Values upholds them • Inspiring vision: “ unleashing India’s creativity.” • It is a situation of complete trust and equality: --“ No-monitoring policy” leads to transparency, freedom from fear --No attendance system --No limit on sick leave that an employee can avail --Complete freedom to employees to come & go --Freedom to think and innovate • Same rules for all categories of people --Same hotels when on travel --CEO as all others fly economy class --CEO sits in similar cubicles as all others
  40. 40. In the Context of Contemporary Developments In IRWe can Look at the Crisis at Honda
  41. 41. Police beating HONDA workers on 25th July, 2005
  42. 42. The HONDA Case• Subsidiary of Honda: 3000 employees: Plant set up in1999• Aim: Produce product of highest quality at reasonableprice• Honda philosophy of 3 joys:Buying/selling/manufacturing• Alleged indifferent & authoritarian Indian middle mgt. —Alleged assault by Japanese Manager• Failed to meet WM expectation: Diwali gift/leave/Lack ofrespect• Worker’s attempt to unionize: Mgt.’s resistance andaction:
  43. 43. Key Issues and Problems:1. Mgmt.’s approach to practicing a non-union model made them blind to reality DID NOT LISTEN TO WORKERS2. Workers viewed Mgmt activity as coercive and repressive3. Incompetent people mgt. by Indian Middle managers—Indifference4. Indian mgmt. blocking direct access to top company executive5. The 3 joys of HONDA were used as a means of control
  44. 44. Key Issues and Problems7. Issues in cross-cultural management -- Japanese didnt understand issues in managing Indian people8. Failure of mgt. to realize importance of Diwali in Indian IR9. Tokenism of conciliation in resolving collective issues10. Complacency on the part of Indian mgrs. about labour power
  45. 45. Clash between Police and workers on 26 July, 2005
  46. 46. Workers meet Sonia Gandhi against allegedhighhandedness of Honda management and the police
  47. 47. Key causes of the HONDA’s Difficulty1.Management taking Workers for granted:• Power of the former leadership not taken into account – he was well liked Mr. Singh had been well liked• No safety valve for Workers or way to address Grievances• Overlooking the importance of Diwali to Indians – giving only a small gift (Rs. 600 given)• Worker facilities not provided - request dismissed• Strict system of granting leave: Sermons given
  48. 48. Management taking Workers for granted continued…• Idiosyncratic VP (Mfg.): A hard task master with 14 ft stick —Kicked a WM who was 2 minutes late after tea• Too many memos issued: Fear of managerial authority• WM perceived partiality in posting by managers: Divide & Rule also• Big difference between Hero-Honda & HMSI salaries: WM living together• Negative policies of the mgt. regarding union-formation made workers more determined - created fertile ground for the flare up• High-handedness of the police, “ fighting fire with fire”
  49. 49. 2. Ill prepared HR/IR team not able to tell the emperor he had no clothes —Poor HR Advocate Role —HR/IR chief as an assistant mgr—He reported to Mfg. Head3. Small Number of HR/IR Team: --Only 10-12 out of 3000 people
  50. 50. 4. No internalization of HR procedures & Practices: —No procedure for charge sheet —Japanese thought people never revolt because they are “ gentle and not aggressive”5. No alignment of Business & HR/IR Strategy6. Low salary compared to Hero-Honda (same region)7. Contract Workers removed every 6 months: A nguish constant training
  51. 51. Lessons inPeoplemanagementfromthe HONDA caseas a guide forBusiness success
  52. 52. 1. Leadership matters2. Competent HR department is key3. Well crafted and communicated Mission and Vision4. Maintain channels of communication5. HR Strategy must align with and support business6. Listen to Employee concerns and issues for Organizational Justice7. Use HR Interventions (BOTH HARD AND SOFT) as tools for success (welfare plans, empowerment, reward and recognition, etc.)
  53. 53. 8. Keep cross-cultural issues in view
  54. 54. 9. Establish a sense of urgency10.Recruit and Retain Talent - right person In right job at the right time11.Be clear about performance and results – let them drive success12.Create short term wins (reward and recognition)
  55. 55. Success in India / value and understand differences
  56. 56. • Thank you• SHRM• And SHRM INDIA• www.shrm.org• www.shrm.org/india

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