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
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
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Human Resource Management
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.
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?
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?
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 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.
 |
| 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 |
Question:
1)But
how should he see it through?
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?
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?
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?
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