Human resource management2

The Indian Institute of Business Management & Studies
SUBJECT: Human Resource Management Marks:100
Note: Solve any 4 Cases Study’s
CASE: I Enterprise Builds On People
When most people think of car-rental firms, the names of Hertz and Avis usually come to mind. But in
the last few years, Enterprise Rent-A-Car has overtaken both of these industry giants, and today it
stands as both the largest and the most profitable business in the car-rental industry. In 2001, for
instance, the firm had sales in excess of $6.3 billion and employed over 50,000 people.
Jack Taylor started Enterprise in St. Louis in 1957. Taylor had a unique strategy in mind for
Enterprise, and that strategy played a key role in the firm’s initial success. Most car-rental firms like
Hertz and Avis base most of their locations in or near airports, train stations, and other transportation
hubs. These firms see their customers as business travellers and people who fly for vacation and then
need transportation at the end of their flight. But Enterprise went after a different customer. It sought to
rent cars to individuals whose own cars are being repaired or who are taking a driving vacation.
The firm got its start by working with insurance companies. A standard feature in many automobile
insurance policies is the provision of a rental car when one’s personal car has been in an accident or
has been stolen. Firms like Hertz and Avis charge relatively high daily rates because their customers
need the convenience of being near an airport and/or they are having their expenses paid by their
employer. These rates are often higher than insurance companies are willing to pay, so customers who
these firms end up paying part of the rental bills themselves. In addition, their locations are also often
inconvenient for people seeking a replacement car while theirs is in the shop.
But Enterprise located stores in downtown and suburban areas, where local residents actually live.
The firm also provides local pickup and delivery service in most areas. It also negotiates exclusive
contract arrangements with local insurance agents. They get the agent’s referral business while
guaranteeing lower rates that are more in line with what insurance covers.
In recent years, Enterprise has started to expand its market base by pursuing a two-pronged growth
strategy. First, the firm has started opening airport locations to compete with Hertz and Avis more
directly. But their target is still the occasional renter than the frequent business traveller. Second, the
firm also began to expand into international markets and today has rental offices in the United
Kingdom, Ireland and Germany.
Another key to Enterprise’s success has been its human resource strategy. The firm targets a certain
kind of individual to hire; its preferred new employee is a college graduate from bottom half of
graduating class, and preferably one who was an athlete or who was otherwise actively involved in
campus social activities. The rationale for this unusual academic standard is actually quite simple.
Enterprise managers do not believe that especially high levels of achievements are necessary to
perform well in the car-rental industry, but having a college degree nevertheless demonstrates
intelligence and motivation. In addition, since interpersonal relations are important to its business,
Enterprise wants people who were social directors or high-ranking officers of social organisations such
as fraternities or sororities. Athletes are also desirable because of their competitiveness.
Once hired, new employees at Enterprise are often shocked at the performance expectations placed
on them by the firm. They generally work long, grueling hours for relatively low pay.
And all Enterprise managers are expected to jump in and help wash or vacuum cars when a rental
agency gets backed up. All Enterprise managers must wear coordinated dress shirts and ties and can
have facial hair only when “medically necessary”. And women must wear skirts no shorter than two
inches above their knees or creased pants.
1

So what are the incentives for working at Enterprise? For one thing, it’s an unfortunate fact of life
that college graduates with low grades often struggle to find work. Thus, a job at Enterprise is still
better than no job at all. The firm does not hire outsiders—every position is filled by promoting
someone already inside the company. Thus, Enterprise employees know that if they work hard and do
their best, they may very well succeed in moving higher up the corporate ladder at a growing and
successful firm.
Question:
1. Would Enterprise’s approach human resource management work in other industries?
2. Does Enterprise face any risks from its human resource strategy?
3. Would you want to work for Enterprise? Why or why not?
2

CASE: II Doing The Dirty Work
Business magazines and newspapers regularly publish articles about the changing nature of work in the
United States and about how many jobs are being changed. Indeed, because so much has been made of
the shift toward service-sector and professional jobs, many people assumed that the number of
unpleasant an undesirable jobs has declined.
In fact, nothing could be further from the truth. Millions of Americans work in gleaming air-
conditioned facilities, but many others work in dirty, grimy, and unsafe settings. For example, many
jobs in the recycling industry require workers to sort through moving conveyors of trash, pulling out
those items that can be recycled. Other relatively unattractive jobs include cleaning hospital restrooms,
washing dishes in a restaurant, and handling toxic waste.
Consider the jobs in a chicken-processing facility. Much like a manufacturing assembly line, a
chicken-processing facility is organised around a moving conveyor system. Workers call it the chain.
In reality, it’s a steel cable with large clips that carries dead chickens down what might be called a
“disassembly line.” Standing along this line are dozens of workers who do, in fact, take the birds apart
as they pass.
Even the titles of the jobs are unsavory. Among the first set of jobs along the chain is the skinner.
Skinners use sharp instruments to cut and pull the skin off the dead chicken. Towards the middle of the
line are the gut pullers. These workers reach inside the chicken carcasses and remove the intestines and
other organs. At the end of the line are the gizzard cutters, who tackle the more difficult organs
attached to the inside of the chicken’s carcass. These organs have to be individually cut and removed
for disposal.
The work is obviously distasteful, and the pace of the work is unrelenting. On a good day the chain
moves an average of ninety chickens a minute for nine hours. And the workers are essentially held
captive by the moving chain. For example, no one can vacate a post to use the bathroom or for other
reasons without the permission of the supervisor. In some plants, taking an unauthorised bathroom
break can result in suspension without pay. But the noise in a typical chicken-processing plant is so
loud that the supervisor can’t hear someone calling for relief unless the person happens to be standing
close by.
Jobs such as these on the chicken-processing line are actually becoming increasingly common.
Fuelled by Americans’ growing appetites for lean, easy-to-cook meat, the number of poultry workers
has almost doubled since 1980, and today they constitute a work force of around a quarter of a million
people. Indeed, the chicken-processing industry has become a major component of the state economies
of Georgia, North Carolina, Mississippi, Arkansas, and Alabama.
Besides being unpleasant and dirty, many jobs in a chicken-processing plant are dangerous and
unhealthy. Some workers, for example, have to fight the live birds when they are first hung on the
chains. These workers are routinely scratched and pecked by the chickens. And the air inside a typical
chicken-processing plant is difficult to breathe. Workers are usually supplied with paper masks, but
most don’t use them because they are hot and confining.
And the work space itself is so tight that the workers often cut themselves—and sometimes their
coworkers—with the knives, scissors, and other instruments they use to perform their jobs. Indeed,
poultry processing ranks third among industries in the United States for cumulative trauma injuries
such as carpet tunnel syndrome. The inevitable chicken feathers, faeces, and blood also contribute to
the hazardous and unpleasant work environment.
Question:
1. How relevant are the concepts of competencies to the jobs in a chicken-processing plant?
2. How might you try to improve the jobs in a chicken-processing plant?
3. Are dirty, dangerous, and unpleasant jobs an inevitable part of any economy?
3

CASE: III On Pegging Pay to Performance
“As you are aware, the Government of India has removed the capping on salaries of directors and has
left the matter of their compensation to be decided by shareholders. This is indeed a welcome step,”
said Samuel Menezes, president Abhayankar, Ltd., opening the meeting of the managing committee
convened to discuss the elements of the company’s new plan for middle managers.
Abhayankar was am engineering firm with a turnover of Rs 600 crore last year and an employee
strength of 18,00. Two years ago, as a sequel to liberalisation at the macroeconomic level, the
company had restructured its operations from functional teams to product teams. The change had
helped speed up transactional times and reduce systemic inefficiencies, leading to a healthy drive
towards performance.
“I think it is only logical that performance should hereafter be linked to pay,” continued Menezes.
“A scheme in which over 40 per cent of salary will be related to annual profits has been evolved for
executives above the vice-president’s level and it will be implemented after getting shareholders
approval. As far as the shopfloor staff is concerned, a system of incentive-linked monthly productivity
bonus has been in place for years and it serves the purpose of rewarding good work at the assembly
line. In any case, a bulk of its salary will have to continue to be governed by good old values like
hierarchy, rank, seniority and attendance. But it is the middle management which poses a real
dilemma. How does one evaluate its performance? More importantly, how can one ensure that
managers are not shortchanged but get what they truly deserve?”
“Our vice-president (HRD), Ravi Narayanan, has now a plan ready in this regard. He has had
personal discussions with all the 125 middle managers individually over the last few weeks and the
plan is based on their feedback. If there are no major disagreements on the plan, we can put it into
effect from next month. Ravi, may I now ask you to take the floor and make your presentation?”
The lights in the conference room dimmed and the screen on the podium lit up. “The plan I am
going to unfold,” said Narayanan, pointing to the data that surfaced on the screen, “is designed to
enhance team-work and provide incentives for constant improvement and excellence among middle-
level managers. Briefly, the pay will be split into two components. The first consists of 75 per cent of
the original salary and will be determined, as before, by factors of internal equity comprising what Sam
referred to as good old values. It will be a fixed component.”
“The second component of 25 per cent,” he went on, “will be flexible. It will depend on the ability
of each product team as a whole to show a minimum of 5 per cent improvement in five areas every
month—product quality, cost control, speed of delivery, financial performance of the division to which
the product belongs and, finally, compliance with safety and environmental norms. The five areas will
have rating of 30, 25, 20, 15, and 10 per cent respectively.
“This, gentlemen, is the broad premise. The rest is a matter of detail which will be worked out after
some finetuning. Any questions?”
As the lights reappeared, Gautam Ghosh, vice-president (R&D), said, “I don’t like it. And I will
tell you why. Teamwork as a criterion is okay but it also has its pitfalls. The people I take on and
develop are good at what they do. Their research skills are individualistic. Why should their pay
depend on the performance of other members of the product team? The new pay plan makes them team
players first and scientists next. It does not seem right.”
“That is a good one, Gautam,” said Narayanan. “Any other questions? I think I will take them all
together.”
“I have no problems with the scheme and I think it is fine. But just for the sake of argument, let me
take Gautam’s point further without meaning to pick holes in the plan,” said Avinash Sarin, vice-
president (sales). “Look at my dispatch division. My people there have reduced the shipping time from
4

four hours to one over the last six months. But what have they got? Nothing. Why? Because the other
members of the team are not measuring up.”
“I think that is a situation which is bound to prevail until everyone falls in line,” intervened Vipul
Desai, vice president (finance). “There would always be temporary problems in implementing anything
new. The question is whether our long term objectives is right. To the extend that we are trying to
promote teamwork, I think we are on the right track. However, I wish to raise a point. There are many
external factors which impinge on both individual and collective performance. For instance, the cost of
a raw material may suddenly go up in the market affecting product profitability. Why should the
concerned product team be penalised for something beyond its control?”
“I have an observation to make too, Ravi,” said Menezes, “You would recall the survey conducted
by a business fortnightly on ‘The ten companies Indian managers fancy most as a working place’.
Abhayankar got top billings there. We have been the trendsetters in executive compensation in Indian
industry. We have been paying the best. Will your plan ensure that it remains that way?”
As he took the floor again, the dominant thought in Narayanan’s mind was that if his plan were to
be put into place, Abhayankar would set another new trend in executive compensation.
Question:
But how should he see it through?
5

CASE: IV Crisis Blown Over
November 30, 1997 goes down in the history of a Bangalore-based electric company as the day
nobody wanting it to recur but everyone recollecting it with sense of pride.
It was a festive day for all the 700-plus employees. Festoons were strung all over, banners were put
up; banana trunks and leaves adorned the factory gate, instead of the usual red flags; and loud speakers
were blaring Kannada songs. It was day the employees chose to celebrate Kannada Rajyothsava,
annual feature of all Karnataka-based organisations. The function was to start at 4 p.m. and everybody
was eagerly waiting for the big event to take place.
But the event, budgeted at Rs 1,00,000 did not take place. At around 2 p.m., there was a ghastly
accident in the machine shop. Murthy was caught in the vertical turret lathe and was wounded fatally.
His end came in the ambulance on the way to hospital.
The management sought union help, and the union leaders did respond with a positive attitude.
They did not want to fish in troubled waters.
Series of meetings were held between the union leaders and the management. The discussions
centred around two major issues—(i) restoring normalcy, and (ii) determining the amount of
compensation to be paid to the dependants of Murthy.
Luckily for the management, the accident took place on a Saturday. The next day was a weekly
holiday and this helped the tension to diffuse to a large extent. The funeral of the deceased took place
on Sunday without any hitch. The management hoped that things would be normal on Monday
morning.
But the hope was belied. The workers refused to resume work. Again the management approached
the union for help. Union leaders advised the workers to resume work in al departments except in the
machine shop, and the suggestions was accepted by all.
Two weeks went by, nobody entered the machine shop, though work in other places resumed.
Union leaders came with a new idea to the management—to perform a pooja to ward off any evil that
had befallen on the lathe. The management accepted the idea and homa was performed in the machine
shop for about five hours commencing early in the morning. This helped to some extent. The workers
started operations on all other machines in the machine shop except on the fateful lathe. It took two full
months and a lot of persuasion from the union leaders for the workers to switch on the lathe.
The crisis was blown over, thanks to the responsible role played by the union leaders and their
fellow workers. Neither the management nor the workers wish that such an incident should recur.
As the wages of the deceased grossed Rs 6,500 per month, Murthy was not covered under the ESI
Act. Management had to pay compensation. Age and experience of the victim were taken into account
to arrive at Rs 1,87,000 which was the amount to be payable to the wife of the deceased. To this was
added Rs 2,50,000 at the intervention of the union leaders. In addition, the widow was paid a gratuity
and a monthly pension of Rs 4,300. And nobody’s wages were cut for the days not worked.
Murthy’s death witnessed an unusual behavior on the part of the workers and their leaders, and
magnanimous gesture from the management. It is a pride moment in the life of the factory.
Question:
1. Do you think that the Bangalore-based company had practised participative management?
2. If your answer is yes, with what method of participation (you have read in this chapter) do you
relate the above case?
3. If you were the union leader, would your behaviour have been different? If yes, what would it
be?
6

CASE: V A Case of Burnout
When Mahesh joined XYZ Bank (private sector) in 1985, he had one clear goal—to prove his mettle.
He did prove himself and has been promoted five times since his entry into the bank. Compared to
others, his progress has been fastest. Currently, his job demands that Mahesh should work 10 hours a
day with practically no holidays. At least two day in a week, Mahesh is required to travel.
Peers and subordinates at the bank have appreciation for Mahesh. They don’t grudge the ascension
achieved by Mahesh, though there are some who wish they too had been promoted as well.
The post of General Manager fell vacant. One should work as GM for a couple of years if he were
to climb up to the top of the ladder, Mahesh applied for the post along with others in the bank. The
Chairman assured Mahesh that the post would be his.
A sudden development took place which almost wrecked Mahesh’s chances. The bank has the
practice of subjecting all its executives to medical check-up once in a year. The medical reports go
straight to the Chairman who would initiate remedials where necessary. Though Mahesh was only 35,
he too, was required to undergo the test.
The Chairman of the bank received a copy of Mahesh’s physical examination results, along with a
note from the doctor. The note explained that Mahesh was seriously overworked, and recommended
that he be given an immediate four-week vacation. The doctor also recommended that Mahesh’s
workload must be reduced and he must take physical exercise every day. The note warned that if
Mahesh did not care for advice, he would be in for heart trouble in another six months.
After reading the doctor’s note, the Chairman sat back in his chair, and started brooding over. Three
issues were uppermost in his mind—(i) How would Mahesh take this news? (ii) How many others do
have similar fitness problems? (iii) Since the environment in the bank helps create the problem, what
could he do to alleviate it? The idea of holding a stress-management programme flashed in his mind
and suddenly he instructed his secretary to set up a meeting with the doctor and some key staff
members, at the earliest.
Question:
1. If the news is broken to Mahesh, how would he react?
2. If you were giving advice to the Chairman on this matter, what would you recommend?
7

CASE: VI “Whose Side are you on, Anyway?”
It was past 4 pm and Purushottam Mahesh was still at his shopfloor office. The small but elegant office
was a perk he was entitled to after he had been nominated to the board of Horizon Industries (P) Ltd.,
as workman-director six months ago. His shift generally ended at 3 pm and he would be home by late
evening. But that day, he still had long hours ahead of him.
Kshirsagar had been with Horizon for over twenty years. Starting off as a substitute mill-hand in
the paint shop at one of the company’s manufacturing facilities, he had been made permanent on the
job five years later. He had no formal education. He felt this was a handicap, but he made up for it with
a willingness to learn and a certain enthusiasm on the job. He was soon marked by the works manager
as someone to watch out for. Simultaneously, Kshirsagar also came to the attention of the president of
the Horizon Employees’ Union who drafted him into union activities.
Even while he got promoted twice during the period to become the head colour mixer last year,
Kshirsagar had gradually moved up the union hierarchy and had been thrice elected secretary of the
union. Labour-management relations at Horizon were not always cordial. This was largely because the
company had not been recording a consistently good performance. There were frequent cuts in
production every year because of go-slows and strikes by workmen—most of them related to wage
hikes and bonus payments. With a view to ensuring a better understanding on the part of labour, the
problems of company management, the Horizon board, led by chairman and managing director
Aninash Chaturvedi, began to toy with idea of taking on a workman on the board. What started off as a
hesitant move snowballed, after a series of brainstorming sessions with executives and meetings with
the union leaders, into a situation in which Kshirsagar found himself catapulted to the Horizon board
as work-man-director.
It was an untested ground for the company. But the novelty of it all excited both the management
and the labour force. The board members—all functional heads went out of their way to make
Kshirsagar comfortable and the latter also responded quite well. He got used to the ambience of the
boardroom and the sense of power it conveyed. Significantly, he was soon at home with the
perspectives of top management and began to see each issue from both sides.
It was smooth going until the union presented a week before the monthly board meeting, its charter
of demands, one of which was a 30 per cent across-the board hike in wages. The matter was taken up
at the board meeting as part of a special agenda.
“Look at what your people are asking for,” said Chaturvedi, addressing Kshirsagar with a sarcasm
that no one in the board missed. “You know the precarious finances of the company. How could you
be a party to a demand that can’t be met? You better explain to them how ridiculous the demands are,”
he said.
“I don’t think they can all be dismissed as ridiculous,” said Kshirsagar. “And the board can surely
consider the alternatives. We owe at least that much to the union.” But Chaturvedi adjourned the
meeting in a huff, mentioning, once to Kshirsagar that he should “advise the union properly”.
When Kshirsagar told the executive committee members of the union that the board was simply not
prepared to even consider the demands, he immediately sensed the hostility in the room. “You are a
sell out,” one of them said. “Who do you really represent—us or them?” asked another.
“Here comes the crunch,” thought Kshirsagar. And however hard he tried to explain, he felt he was
talking to a wall.
A victim of divided loyalities, he himself was unable to understand whose side he was on. Perhaps
the best course would be to resign from the board. Perhaps he should resign both from the board and
the union. Or may be resign from Horizon itself and seek a job elsewhere. But, he felt, sitting in his
office a little later, “none of it could solve the problem.”
Question:
1. What should he do?
8

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