Human Resource Management in India
Human Resource Management in India
Abstract
India is being widely recognised as one of the most exciting emerging economics
in the world. Besides becoming a global hub of outsourcing, Indian firms are
spreading their wings globally through mergers and acquisitions. During the first
four months of 1997, Indian companies have bought 34 foreign companies for
about U.S. $11 billion dollars. This impressive development has been due to a
growth in inputs (capital and labour) as well as factor productivity. By the year
2020, India is expected to add about 250 million to its labour pool at the rate of
about 18 million a year, which is more than the entire labour force of Germany.
This so called ‘demographic dividend’ has drawn a new interest in the Human
Resource concepts and practices in India. This paper traces notable evidence of
economic organisations and managerial ideas from ancient Indian sources with
enduring traditions and considers them in the context of contemporary
challenges.
Introduction
Over many centuries India has absorbed managerial ideas and practices from
around the world. Early records of trade, from 4500 B.C. to 300 B.C., not only
indicate international economic and political links, but also the ideas of social and
public administration. The world’s first management book, titled ‘Arlhãshastra’,
written three millennium before Christ, codified many aspects of human resource
practices in Ancient India. This treatise presented notions of the financial
administration of the state, guiding principles for trade and commerce, as well as
the management of people. These ideas were to be embedded in organisational
thinking for centuries (Rangarajan 1992, Sihag 2004). Increasing trade, that
included engagement with the Romans, led to widespread and systematic
governance methods by 250 A.D. During the next 300 years, the first Indian
empire, the Gupta Dynasty, encouraged the establishment of rules and regulations
for managerial systems, and later from about 1000 A.D. Islam influenced many
areas of trade and commerce. A further powerful effect on the managerial history
of India was to be provided by the British system of corporate organisation for 200
years. Clearly, the socio cultural roots of Indian heritage are diverse and have been
drawn from multiple sources including ideas brought from other parts of the old
world. Interestingly, these ideas were essentially secular even when they
originated from religious bases.
In the contemporary context, the Indian management mindscape continues to be
influenced by the residual traces of ancient wisdom as it faces the complexities of
global realities. One stream of holistic wisdom, identified as the Vedantic
philosophy, pervades managerial behaviour at all levels of work organisations.
This philosophical tradition has its roots in sacred texts from 2000 B.C. and it
holds that human nature has a capacity for self transformation and attaining
spiritual high ground while facing realities of day to day challenges (Lannoy 1971).
Such cultural based tradition and heritage can have a substantial impact on
current managerial mindsets in terms of family bonding and mutuality of
obligations. The caste system, which was recorded in the writings of the Greek
Ambassador Megasthenes in the third century B.C., is another significant feature
of Indian social heritage that for centuries had impacted organisational
architecture and managerial practices, and has now become the focus of critical
attention in the social, political and legal agenda of the nation.
One of the most significant areas of values and cultural practices has been the
caste system. Traditionally, the caste system maintained social or organisational
balance. Brahmins (priests and teachers) were at the apex, Kshatriya (rulers and
warriors), Vaishya (merchants and managers) and Shwdra (artisans and workers)
occupied the lower levels. Those outside the caste hierarchy were called
‘untouchables’. Even decades ago, a typical public enterprise department could be
dominated by people belonging to a particular caste. Feelings associated with caste
affairs influenced managers in areas like recruitment, promotion and work
allocation (Venkatranam & Chandra 1996). Indian institutions codified a list of
lower castes and tribal communities called ‘scheduled castes and scheduled tribes’.
A strict quota system called, ‘reservation’ in achieving affirmative equity of castes,
has been the eye of political storm in India in recent years. The central government
has decreed 15 per cent of recruitment is to be reserved for scheduled castes, and a
further seven and half per cent for scheduled tribes. In addition, a further 27 per
cent has been decreed for other backward castes. However, the liberalisation of
markets and global linkages have created transformation of attitudes towards
human resource (HR) policies and practices (Khalilzadeh-Shirazi & Zagha 1994,
Gopalan & Rivera 1997). Faced with the challenge of responding to the rationale of
Western ideas of organisation in the changing social and economic scenario of
Indian organisation, practitioners are increasingly taking a broader and reflective
perspective of human resource management (HRM) in India.
This manuscript has three main parts. In the first part is provided an overview of
important historical events and activity that has influenced contemporary
managerial tenets, the second part of the manuscript describes the emerging
contemporary Indian HRM practices and indicates some interesting challenges.
Much of the second part is also summarised on four informative Figures. The
concluding section, the third part of the manuscript, succinctly integrates the two
preceding parts.
Figure 1 also presents another powerful insight of the Indian tradition of the
notion of ‘Guna’ dynamics. According to Sharma (1996), this culture based
framework, which has three types of gunas (attraction), is being increasingly used
in employee assessment and organisational team building strategies. The
contention is that each guna is a separate contribution to the core of human
personalities. The Sattava (or truth orientation) is the sentiment of exalted values
in people, organisations or society. Alternatively, the Tamasik guna depicts a
negative orientation which can be expressed behaviourally as ignorance, greed or
corruption. Those individuals with a Rajasik guna are inherently driven by a desire
to make a worthwhile contribution to their surroundings. Collectively, these
spiritual orientations, which manifest as Sattava, Tamas or Rajas gunas, articulate
as positive or negative HRM functions such as leadership, motivation or other
institutional behavioural activity. The third row of Figure 1 highlights the linking
of HRM trends to socio cultural roots. The culture of Sradha (upward loyalty) and
Sneha (mentoring with affection) outline the behavioural anchors derived from the
civilisational roots. The acceptance of ‘Sradha’ by youngers and the display of
‘Sneha’ by the seniors have been the root of sustainability of all types of Indian
oragnisations. This has a striking similarity to the concepts of ‘oyabun’ and ‘kobun’
in the Japanese cultural context.
Contemporary India
In a recent survey of Indian CEO’s, it was suggested that Indian managerial
leaders were less dependent on their personal charisma, but they emphasised
logical and step by step implementation processes. Indian leaders focused on
empowerment and accountability in cases of critical turnaround challenges,
innovative challenges, innovative technology, product planning and marketing or
when other similar challenges were encountered (Spencer, Rajah, Narayan,
Mohan & Latiri 2007). These social scientists contend.
Leaders in other countries often tell about why they chose a peculiar person for a
certain role per task, detailing the personal characteristics that made that person
right for that situation. They may also consider, in detail, how an assignment
would help someone grow and develop their abilities. In general, Indian leaders
simply did not discuss how they matched particular people to certain roles or
tasks, nor did they usually consider in detail how the personal characteristics of
individuals might shape or inform the best way to influence that person. (Spencer,
et al 2007:90).
Figure 2
Drivers of Contemporary Indian HRM Trends
The other three spheres, of Figure 2, namely the emotional, the socio cultural and
the managerial domains are undergoing, similar profound changes. For instance,
the socio cultural sphere confronts the dialects of the national macro level reform
agenda as well as the challenge of innovating by addressing the hygiene and
motivational features of the work place. Consequently, this sphere, which is
underpinned by the anchors of Sradha and Sneha, has the opportunity to leverage
work setting creativity in dimensions of autonomy, empowerment, multiskilling
and various types of job design. And the emotional sphere, which focuses on
creativity and innovation to encapsulate the notions of workplace commitment
and collaboration as well as favourable teamwork, brings desirable behavioural
elements of transparency and integrity into organisational procedures and
practices. The managerial sphere provides the mechanisms for shifting mindsets,
for in Indian organisations HRM is viewed to be closely aligned with managerial
technical competency. Thus, understanding of the relativity of HRM to strategic
intended organisational performance is less well articulated in Indian firms. The
current emphasis of reconfiguring cadres (voluntary and nonvoluntary
redundancy schemes), downsizing, delayering and similar arrangements will
become less relevant as holistic perspectives gain ground. A hallmark of future
Indian workplaces is likely to be a dominant emphasis on managerial training,
structural redesign and reframing of institutional architectures to achieve
enterprise excellence. Thus, a primary role of Indian managers will be to forge new
employment and industrial relationships through purposeful HRM policies and
practices. In Figure 3 is presented a variety of HRM practices that are being
employed in Indian organisations.
Figure 3
Key HRM Practices in Indian Organisations
HRM Practice Observable Features
Percentage of employees with formally defined work roles is very high in the
Job Description
public sector.
Strong dependence on formal labour market. Direct recruitment from
institutions of higher learning is very common amongst management,
Recruitment engineering and similar professional cadres. Amongst other vehicles,
placement agencies, internet and print media are the most popular medium
for recruitment.
Strong emphasis on security and lifetime employment in public sector
Compensation including a range of facilities like, healthcare, housing and schooling for
children.
Training and Poorly institutionalised in Indian organisations. Popularity of training
Development programmes and their effect in skill and value development undeveloped.
Performance A very low coverage of employees under formal performance appraisal and
Appraisal rewards or organisational goals
Moderately variable across industries. Seniority systems still dominate the
Promotion and
public sector enterprises. Use of merit and performance limited mostly to
Reward
globally orientated industries.
Limited in scope. The seniority based escalator system in the public sector
provides stability and progression in career. Widespread use of voluntary
Career Planning
retirement scheme in public sector by high performing staff. Cross functional
career paths uncommon.
Driven by proactive court rulings, ILO guidelines and legislature provisions.
Gender Equity
Lack of strategic and inclusion vision spread.
The central government has fixed 15 per cent reservations for scheduled
Reservation
castes, 7.5 per cent for scheduled tribes and 27 per cent for backward
System
communities. States vary in their reservation systems.
IR Challenge
The Indian IR system has two main features. First, is the absence of the provision
to recognise a union as a representative or agent for collective bargaining. Second,
is the total dominance of government in regulating the industrial relations (IR)
domain. Though it is relatively easy for members of a work organisation to be
registered as a union under the law, it does not lead to the legal recognition by the
employer in dispute resolution or bargaining process. This contention was made
by Kuruvilla (1996) over a decade ago.
In terms of collective bargaining, industry wide bargaining occurs in certain
industries where the employers are organized, but bargaining otherwise is
decentralised to enterprise level. Although there are no restrictions on the subjects
of bargaining, the Industrial Disputes Act of 1947 restricts the ability of employers
to lay off or retrench employees or to close business. (p.635).
Indian industrial relations have evolved from political roots and labour market
demands. An unique feature of Indian IR has been the dominance of political
parties sponsoring unions. Union membership has been the most popular
breeding ground for politicians, and political leaders have enjoyed the use of union
platforms. Such politicisation has generated conflicts and rivalry creating mayhem
and the hurting of labour interest. Nevertheless, in spite of wage determination by
central government boards, and ad hoc industrial awards, enterprise level
bargaining has yielded positive outcomes. Interestingly, during the 1970s in a
period of the highest number of strikes, the registered number of unions grew
fivefold. But a decade later profound economic and political reform movement saw
a new direction in the trade union movement. A section of scholarly trade union
leaders began to incorporate new global thinking in the union outlook.
Since the 1980s, the Indian industrial relations culture has been considerably
impacted by the intensification of globalised markets. During this time and
beyond, there has been a clear departure from traditional personnel management.
The shift has not only been in the general tone, but in the substantive visions.
Adjustment to the global imperatives of an emerging service sector, sunrise
industries, and demographic shifts in competencies has given rise to new thinking.
In spite of most of the Indian labour laws being entrenched in a world view that is
very different to the current realities, and the obvious urgency for them to be
updated to incorporate more flexible, competitive work systems, the built in
rigidities are still proving a formidable obstacle.
The most alarming issue in the HR and IR context is the lack of job opportunities
outside urban areas where more than 70 per cent of the population lives. As has
been pointed out by Meredith (2007).
While Indian university graduates line up for jobs that can propel them into newly
vibrant middle class, per India’s rural and urban poor, change has been
interminably delayed. Expectations, like incomes, are rising across India, and not
just for those working in call centres. Even as the New India cohort thrives, much
of the rest of India is making much slower gains or even being left behind, creating
social and political tensions that cloud India’s impressive strides forward. The
lowest paid workers in the off shoring industry those working in the call centres
earn median wages of $275 a month. But most Indians still earn less than $60 a
month or just $2 a day. (p.125).
• A choice of working in
over 170 offices across
40 countries in a
• Significant
Tata variety of areas.
Consulting impact on
Services(TCS) • Paternity leave for job hopping
adoption of a girl child achieved
• Discounts on group
parties
• ‘Wings Within’
programme where
• Has led to a
existing employees get
WIPRO higher
a chance to quit their
retention
current job role and
rate
join a different firm
within WIPRO
INFOSYS
• Fostering a sense of • Moderate
belongingness, creative Retentions
artistic and social rate increase
Figure 4
Examples of Retention Strategies for young Professionals in India’s BPO and
Services Sectors
Name of the
Retention Strategy Impact
Company
best ‘corporate
universities’ in the
world
• Employees allowed to
choose flexible working
• Struggling
Microsoft- schedule
India to minimise
• Moving people across job hopping
functions and sections
in assisting employees
find their area of
interest
• Culture change
valuing innovation and
talent over age and
experience
• Stabilised
Mahindra & Co • Institutionalising a
job hopping
practice called ‘reverse
significantly
mentoring’ where
young people are given
opportunities of
mentoring their seniors
A dramatic shift in recruitment practices has been taking place as globally pretend
Indian companies as well as global technical services rivals have made India a
battlefield of recruitment for the best workers. For example, IBM’s workforce in
India has more than doubled in two years to a cadre of 53,000. This outcome has
come with the elimination of 20,000 jobs in high cost markets like the U.S.,
Europe and Japan. The R&D centre of IBM is staffed by 3,000 world class
engineers and is being recognised for its ability to innovate on all areas from
simple processes, softwares, semiconductors as well as supercomputers. It is
interesting to note that IBM has dominated the recruitment market in technical
services in India during 2006. This leading company recruited 10,000 employees
out of a total of 25,000 people who were recruited to the technical services
industry. The prominence of IBM as an employer of technically qualified
personnel has been acknowledged in the popular press (Business Week 2007).
In Pune, a rapidly developing IT centre near Mumbai, the company has been
dispatching vans with signs saying, ‘IBM is hiring’, to the gates of the rivals at
lunch time. Their hit rate is pretty good laments a manager at a tech firm that has
lost employees to IBM.
Conclusion
The World Competitiveness Report rated India’s human resource capabilities as
being comparatively weaker than most Asian nations. The recognition of world
class human resource capability as being pivotal to global success has changed
Indian HRM cultures in recent years. While the historical and traditional roots
remain deeply embedded in the subjective world of managers, emphasis on
objective global concepts and practices are becoming more common. Three very
different perspectives in HRM are evident. Firstly, Indian firms with a global
outlook; secondly, global firms seeking to adapt to the Indian context; and thirdly,
the HRM practice in public sectors undertakings (PSV’S). As the Indian economy
becomes more globally linked, all three perspectives will move increasingly
towards a cross verging strengthening. Interestingly, within the national context,
India itself is not a homogenous entity. Regional variations in terms of industry
size, provincial business culture, and political issues play very relevant roles. The
nature of hierarchy, status, authority, responsibility and similar other concepts
vary widely across the nations synerging system maintenance. Indeed,
organisational performance and personal success are critical in the new era.
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